An auditor is selecting from among alternative variables sampling plans for accounts receivable and gathers the following information. The client, a Midwestern manufacturer of high-technology electrical components, had been audited previously by a crosstown public accounting firm. In five prior engagements, the predecessor auditors had issued unqualified opinions, except for last year when they issued a qualified opinion because of departures from generally accepted accounting principles. The client maintains subsidiary records for each individual customer account, and supporting documents are filed within Accounts Receivable. A review of selected sections of the predecessor auditor's working papers indicates that differences between recorded and audited values for individual customer accounts tended to increase as recorded book value increased.

Required:

1. Is nonstatistical sampling appropriate in this case? Explain.

2. Explain why each of the following statistical sampling plans may be appropriate or inappropriate in this case:

a. Ratio estimation.

b. Difference estimation.

c. Mean-per-unit estimation.

d. Probability-proportional-to-size sampling.