Certified Internal Auditor (CIA) Practice Test

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Prepare for the Certified Internal Auditor Exam. Use flashcards and multiple-choice questions, each with hints and explanations. Get ready for your CIA test now!

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In monetary-unit statistical sampling, how is the probability of selection related to the value of each invoice?

  1. It is equal for all invoices

  2. It is unknown

  3. It is represented by one monetary unit

  4. 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.