If it is not feasible to audit 100 percent of potentially suspect claims, what should the auditor determine?

If it is not feasible to audit 100 percent of potentially suspect claims, what should the auditor determine?

• A. The sampling approach and the financial impact of non-compliance.
• B. The provider's tax status.
• C. The payer's annual budget.
• D. The age of claims.

Answer: (A)

When you can’t audit every potentially suspect claim, planning the audit around a sampling approach and estimating the financial impact of any non-compliance is essential. The sampling plan decides which claims to test, how many to pull, and how to generalize findings to the whole population, ensuring the results are meaningful while keeping work efficient. The financial impact of non-compliance sets tolerable thresholds, guides how large a misstatement would be considered material, and helps determine whether the sampled results indicate a real risk that needs action. Together, they help the auditor assess risk, determine how much testing is needed, and decide on reporting or adjustment strategies. The provider’s tax status doesn’t address how to design the sample or quantify potential missings. The payer’s annual budget isn’t directly about testing suspect claims or measuring misstatement risk. The age of claims is a data characteristic, but it doesn’t by itself establish the sampling method or the expected financial impact of any non-compliance.

When you can’t audit every potentially suspect claim, planning the audit around a sampling approach and estimating the financial impact of any non-compliance is essential. The sampling plan decides which claims to test, how many to pull, and how to generalize findings to the whole population, ensuring the results are meaningful while keeping work efficient. The financial impact of non-compliance sets tolerable thresholds, guides how large a misstatement would be considered material, and helps determine whether the sampled results indicate a real risk that needs action. Together, they help the auditor assess risk, determine how much testing is needed, and decide on reporting or adjustment strategies.

The provider’s tax status doesn’t address how to design the sample or quantify potential missings. The payer’s annual budget isn’t directly about testing suspect claims or measuring misstatement risk. The age of claims is a data characteristic, but it doesn’t by itself establish the sampling method or the expected financial impact of any non-compliance.