Lesson: Probability-Proportional-to-Size Sampling

This lesson discusses the concept of Probability-Proportional-to-Size (PPS) sampling, which is a method used to estimate overstatement errors. The lesson explains how items are selected at random based on their size, with higher size items having a greater chance of being selected. An example is provided to illustrate this concept, comparing items with sizes of 10 and 20, and showing how the item with size 20 will have double the chance of being selected. The goal of PPS sampling is to ensure that the sample is representative of the population and allows the auditor to make reliable estimates. Familiarity with this technique is important for understanding its application in auditing practice.