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In monetary-unit statistical sampling, how is the probability of selection related to the value of each invoice?
It is equal for all invoices
It is unknown
It is represented by one monetary unit
It is proportional to its monetary value
The correct answer is: It is proportional to its monetary value
In monetary-unit statistical sampling, the probability of selection is directly related to the value of each invoice. This method allows auditors to focus their efforts on larger items in the sampled population, as invoices with higher values contribute more to the total monetary value of the sample. Therefore, invoices with higher amounts have a greater likelihood of being selected in the sampling process because each monetary unit in those invoices represents a specific opportunity for selection. This approach leverages the characteristics of the population, ensuring that the sample is representative in terms of the financial significance of the items examined. Essentially, larger invoices have a proportional chance of being included in the sample compared to smaller invoices. Consequently, this statistical sampling method effectively enhances the auditor's focus on areas with higher risk or materiality, optimizing the audit process.