Which of the following is a reason data analysis can improve audit quality?

Data analysis can significantly enhance audit quality by allowing auditors to conduct 100% checking of data, which fundamentally reduces sampling risk. When auditors are limited to sampling, there is always a possibility that the sample may not be representative of the entire data set, leading to potential oversight of significant misstatements or errors. By leveraging data analysis techniques, auditors can examine entire populations of transactions and balances instead of relying solely on a subset. This comprehensive review ensures a more thorough understanding of the entity's operations and finances, leading to more accurate conclusions and an effective audit process.

While random sampling can be useful in certain contexts, it does not inherently improve the accuracy or reliability of the audit as much as 100% checking does. Additionally, the approaches that eliminate the need for actual inspections or try to guarantee accurate financial forecasts do not effectively capture the essence of enhancing audit quality through comprehensive analysis. Instead, enabling full data inspection through data analysis is key to mitigating risks and improving the reliability of audit outcomes.