Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which risks are primarily addressed through proper audit procedures during testing?

1. Nonsampling risks

2. Sampling risks

3. Operational risks

4. Market risks

The correct answer is: Sampling risks

The correct answer revolves around understanding the role of audit procedures in the context of risk assessment during testing. Sampling risks are directly related to the use of sampling techniques in an audit. When an auditor selects a sample from a larger population, there is a possibility that the sample may not be representative of the population as a whole. This can lead to incorrect conclusions about the financial statements based on the sample data. Proper audit procedures, particularly those involving the selection and testing of samples, are designed to minimize sampling risks. This includes utilizing appropriate sample sizes, ensuring random selection methods, and employing statistical techniques to bolster the reliability of the audit conclusions drawn from the sample. By focusing on sampling risks, auditors can better ensure that their findings are valid and reflective of the entire population of transactions or balances being audited. The other types of risks mentioned do hold significance in the auditing context but are generally not mitigated through sampling techniques. Nonsampling risks pertain to human judgment errors or some other aspect that could affect the audit outcome but are not representative of sampling issues. Operational risks relate to the execution of processes within an organization that may lead to financial misstatements, while market risks concern economic factors and fluctuations affecting a company's objectives. These risks are not primarily addressed through audit