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Which are the disadvantages of monetary unit sampling?

Which are the disadvantages of monetary unit sampling?

Answers

Wilfred
i. Does not cope easily with errors of understatement. A debtors balance which is understated will have a smaller chance of being selected than if it was correctly valued hence there is a reduced chance of selecting that balance and discovering the error.

ii. It can be difficult to select samples where a computer cannot be used e.g. where the accounting system of an organization is manual. Manual selection will involve adding items cumulatively through the entire population which is very tiring.

iii. It is not possible to extend a sample if the error rate turns out to be higher than the expected
error. In such cases an entirely new sample must be selected and evaluated.

iv. Monetary unit sampling is useful especially in testing for overstatements where significant understatements are not expected i.e. when dealing with debtors, fixed assets and stock it is clearly not suitable for testing creditors where understatement is the primary characteristic to be tested.
Wilfykil answered the question on April 12, 2019 at 05:28

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