Which Sampling Method Reviews Balance Sheets for Material Transactions?

CISA By islever Editorial Last updated

Short answer

A Apply variable sampling to statistically evaluate monetary account balances and detect material misstatements in financial statements.

Question

A review of an organization's balance sheet for material transactions and an application review of the program that produced the balance sheet would use which of the following sampling methods?
  1. Variable sampling Correct Answer
  2. Judgmental sampling
  3. Discovery sampling
  4. Stop-or-go sampling

Key Takeaways

This question tests recognition of variable sampling for quantitative financial data, often confused with judgmental sampling when auditors focus on high-risk items.

Variable sampling is used to audit monetary and quantitative data like balance sheets for material transactions. The CISA community and official ISACA manuals confirm this exact scenario tests knowledge of attribute versus variable sampling distinctions.

Common mistake: Judgmental sampling is frequently chosen because auditors intuitively think selecting material transactions requires expert discretion, but variable sampling specifically handles quantitative testing of account balances.

Expert Analysis

Why the Answer Is Correct

Variable sampling estimates numerical characteristics of a population, making it ideal for reviewing monetary values like balance sheet transactions. ISACA’s CISA Review Manual explicitly uses this exact scenario as a textbook example of variable sampling applications. It provides statistical evidence regarding stated account balances and detects significant misstatements.

Why the Other Options Are Wrong

Judgmental sampling relies on auditor discretion rather than statistical quantification, which does not align with testing monetary totals. Discovery sampling targets rare events or fraud prevalence, not routine balance sheet verification. Stop-or-go sampling is designed for quick pass-fail attribute testing and lacks the precision needed for financial statement validation.

Community Comment Notes

Verified candidates consistently confirm the answer by citing pages from the 27th and 28th editions of the CISA Review Manual. Commenters note that while materiality suggests selective auditing, the statistical nature of testing quantitative balances mandates variable sampling. Some learners initially debate judgmental sampling but resolve it upon reviewing the manual's direct quotation.

Exam Strategy

Memorize the specific examples tied to each sampling method in the CISA Review Manual, as ISACA frequently recycles these exact scenarios. When you see keywords like 'monetary values,' 'account balances,' or 'misstatement detection,' immediately select variable sampling over discretionary alternatives.

Frequently Asked Questions

Why isn't judgmental sampling correct for material transactions?

Judgmental sampling relies on auditor discretion rather than statistical quantification. Variable sampling is required when testing monetary account balances for precise misstatement detection.

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Community Votes

A
100%

100% of anonymous learners picked answer A. Votes are pick records left by other test-takers — they are not the verified answer.

Discussion 6 contributions

Compiled from public community threads and reader submissions, lightly edited for clarity. Handles and vote tallies are shown as recorded, and comments reflect the views of individual contributors.

From public community threads 6

  1. 46080f2 👍 2 Answered A
    Definitively A. - this question seems to be directly referencing to the variable sampling description in the Manual: From the CISA Ref Manual 27th ed, 1.7.2 Sampling -> Variable Sampling "...An example of variable sampling is a review of an organization’s balance sheet for material transactions and an application review of the program that produced the balance sheet...."
  2. Swallows 👍 1 Answered B
    Judgmental sampling involves selecting samples based on the auditor's judgment and expertise. It's often used when specific items are of interest or when there's a need to focus on high-risk areas, such as material transactions in a balance sheet or reviewing the functionality of a program. This method allows auditors to target specific areas or transactions they deem most important or risky, which aligns well with the objectives of the described reviews.
  3. a84n 👍 1 Answered A
    Answer: A & B For reviewing the organization's balance sheet for material transactions: Variable sampling or discovery sampling. For conducting an application review of the program that produced the balance sheet: Judgmental sampling.
  4. MIMIBAK 👍 1 Answered A
    MAUNAL 28TH EDITION PAGE 62:'An example of variable sampling is a review of an organization’s balance sheet for material transactions and an application review of the program that produced the balance sheet"
  5. Swallows 👍 1 Answered A
    It is usually applied to tests of monetary or quantitative amounts and provides evidence of significant misstatements in stated amounts. Variable sampling is used to test account balances.
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  1. marc4354345 👍 1 Answered A
    Example is taken from CISA Review Manual. It is variable sampling.

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