[Biff-1955-Tannen]

“Primary Advantage of PPS Sampling

The main advantage of PPS sampling is efficiency. If there are few differences between audit and book values, PPS sampling may result in smaller sample sizes than the other sampling methods. If there are many differences, however, PPS sample sizes can become too large to be practical.”

My question here is, how do we know if there are few differences between the audit value and book values before doing the actual testing? I thought that is the whole point of the testing, to test the reasonableness of their books (ie. differences between audit value and book value). So we test the reasonableness of the books through our sampling, BUT in order to use PPS sampling we need to know before hand if there are many differences between audit value and book value? Do you see what I’m saying?

The only thing I can compare this to is the whole “you need experience to get experience” thing…

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only