Question 1

In a comparison between MPU sampling and PPS sampling, an explicit statement is required in MPU plans, but not PPS plans, for:

Accepted Answer

A)  tolerable misstatement. 
B)  risk of incorrect rejection. 
C)  population standard deviation. 
D)  risk of incorrect rejection and population standard deviation. 
E)  tolerable misstatement and risk of incorrect rejection. 
A)  tolerable misstatement. 
B)  risk of incorrect rejection. 
C)  population standard deviation. 
D)  risk of incorrect rejection and population standard deviation. 
E)  tolerable misstatement and risk of incorrect rejection.

Question 2

Whenever sampling is used in an audit procedure, uncertainty will be present. The two sources of this uncertainty are:

Accepted Answer

A)  sampling risk and nonsampling risk. 
B)  compliance risk and substantive risk. 
C)  inherent risk and control risk. 
D)  detection risk and occurrence risk. 
E)  detection risk and inherent risk. 
A)  sampling risk and nonsampling risk. 
B)  compliance risk and substantive risk. 
C)  inherent risk and control risk. 
D)  detection risk and occurrence risk. 
E)  detection risk and inherent risk.

Question 3

Identify the factors in the PPS sample size formula that have:
1.a direct effect and
2.an inverse effect on sample size.

Accepted Answer

1.Direct effect: book value, a

Question 4

The auditor has decided to use PPS sampling in the confirmation of individual sales transactions with customers. The population and the logical sampling unit are most likely to be, respectively:

Accepted Answer

A)  all customer accounts and the individual dollars in the accounts. 
B)  customer accounts with debit balances and individual dollars in the accounts. 
C)  the sales invoice file and the individual dollars on the invoices. 
D)  all recorded sales during the year and individual sales invoices. 
E)  all sales invoices during the year and individual sales orders. 
A)  all customer accounts and the individual dollars in the accounts. 
B)  customer accounts with debit balances and individual dollars in the accounts. 
C)  the sales invoice file and the individual dollars on the invoices. 
D)  all recorded sales during the year and individual sales invoices. 
E)  all sales invoices during the year and individual sales orders.

Question 5

The normal distribution underlies:

Accepted Answer

A)  PPS sampling. 
B)  classical attribute sampling. 
C)  discovery sampling. 
D)  both classical attribute and variables sampling. 
E)  classical variables sampling. 
A)  PPS sampling. 
B)  classical attribute sampling. 
C)  discovery sampling. 
D)  both classical attribute and variables sampling. 
E)  classical variables sampling.

Question 6

Which of the following is not an advantage of probability-proportional-to-size (PPS) sampling?

Accepted Answer

A)  PPS systematic sample selection automatically identifies any item that is individually significant if its value is less than an upper monetary cutoff. 
B)  PPS sampling, if the auditor expects no misstatements, will usually result in a smaller sample size than under classical variables sampling. 
C)  PPS sampling automatically results in a stratified sample. 
D)  It is generally easier to use than classical variables sampling. 
E)  The size of a PPS sample is not based on any measure of the estimated variation of audit values. 
A)  PPS systematic sample selection automatically identifies any item that is individually significant if its value is less than an upper monetary cutoff. 
B)  PPS sampling, if the auditor expects no misstatements, will usually result in a smaller sample size than under classical variables sampling. 
C)  PPS sampling automatically results in a stratified sample. 
D)  It is generally easier to use than classical variables sampling. 
E)  The size of a PPS sample is not based on any measure of the estimated variation of audit values.

Question 7

Probability-proportional-to-size (PPS) sampling should not be used when:

Accepted Answer

A)  the number of units in the population is unknown at the start of sampling. 
B)  the variability of the population is unknown. 
C)  book values for sampling units are not available. 
D)  transactions and balances are tested for overstatement. 
E)  testing plant asset additions. 
A)  the number of units in the population is unknown at the start of sampling. 
B)  the variability of the population is unknown. 
C)  book values for sampling units are not available. 
D)  transactions and balances are tested for overstatement. 
E)  testing plant asset additions.

Question 8

Stating the expansion factor is required in all PPS sampling plans.

Accepted Answer

A) True 
 B)False

Question 9

The reliability factor is based on the risk of:

Accepted Answer

A)  incorrect acceptance and zero misstatements. 
B)  incorrect rejection and zero misstatements. 
C)  incorrect acceptance and expected misstatements. 
D)  incorrect rejection and expected misstatements. 
E)  correct acceptance and expected misstatements. 
A)  incorrect acceptance and zero misstatements. 
B)  incorrect rejection and zero misstatements. 
C)  incorrect acceptance and expected misstatements. 
D)  incorrect rejection and expected misstatements. 
E)  correct acceptance and expected misstatements.

Question 10

In MPU sampling, the auditor should consider the qualitative aspects of the sample results prior to reaching an overall conclusion.

Accepted Answer

A) True 
 B)False

Question 11

In PPS sampling plans, basic precision is:

Accepted Answer

A)  the allowance for sampling risk when the sample contains no misstatements. 
B)  the sum of the sampling interval and the reliability factor. 
C)  equal to the sampling interval when the sample contains no misstatements. 
D)  the total deviation found in the sample. 
E)  the sum of the sampling interval and the expansion factor. 
A)  the allowance for sampling risk when the sample contains no misstatements. 
B)  the sum of the sampling interval and the reliability factor. 
C)  equal to the sampling interval when the sample contains no misstatements. 
D)  the total deviation found in the sample. 
E)  the sum of the sampling interval and the expansion factor.

Question 12

Which of the following is least likely to be listed as an advantage of PPS sampling over classical variables sampling?

Accepted Answer

A)  easier to use 
B)  automatic stratification of the population 
C)  more accurate statement of ASR even when misstatements are found 
D)  usually results in a smaller sample size if no misstatements are expected 
E)  sample selection may begin even before the complete population is available 
A)  easier to use 
B)  automatic stratification of the population 
C)  more accurate statement of ASR even when misstatements are found 
D)  usually results in a smaller sample size if no misstatements are expected 
E)  sample selection may begin even before the complete population is available

Question 13

In PPS sampling plans, the effect population book value has on sample size is:

Accepted Answer

A)  negligible. 
B)  direct. 
C)  indirect. 
D)  inverse. 
E)  ignored completely. 
A)  negligible. 
B)  direct. 
C)  indirect. 
D)  inverse. 
E)  ignored completely.

Question 14

The most common objective of PPS sampling plans is to:

Accepted Answer

A)  determine the rate of deviation from a control procedure. 
B)  estimate the true dollar value in an unrecorded account. 
C)  establish that the rate of deviation from a control procedure does not exceed the established tolerable rate. 
D)  independently estimate the value of a class of transactions. 
E)  obtain evidence that a recorded account balance is not materially misstated. 
A)  determine the rate of deviation from a control procedure. 
B)  estimate the true dollar value in an unrecorded account. 
C)  establish that the rate of deviation from a control procedure does not exceed the established tolerable rate. 
D)  independently estimate the value of a class of transactions. 
E)  obtain evidence that a recorded account balance is not materially misstated.

Question 15

Short Answer 13-3 (5 minutes)
1.Identify the calculations that are required in making a quantitative assessment of the sample results in an MPU sampling plan.
2.Indicate the purpose and the formula for calculating the adjusted achieved allowance for sampling risk.

Accepted Answer

1.The calculations are to determine:
2.A

Question 16

In determining sample size in nonstatistical sampling, the auditor should consider the same factors used in statistical sampling.

Accepted Answer

A) True 
 B)False

Question 17

One disadvantage of PPS sampling is that when overstatements are identified, the evaluation of the sample may require special consideration.

Accepted Answer

A) True 
 B)False

Question 18

In PPS sampling plans, the risk of incorrect rejection is:

Accepted Answer

A)  stated explicitly in the model. 
B)  not controlled at all. 
C)  directly related to sample size. 
D)  controlled indirectly by specifying anticipated misstatement. 
E)  always quantified. 
A)  stated explicitly in the model. 
B)  not controlled at all. 
C)  directly related to sample size. 
D)  controlled indirectly by specifying anticipated misstatement. 
E)  always quantified.

Question 19

Audit sampling applies to control risk and detection risk.

Accepted Answer

A) True 
 B)False

Question 20

Match between columns
                        Premises:  Population size
 Variation in the population
 Tolerable misstatement
 Expected misstatement
 Risk of incorrect acceptance
 Risk of incorrect rejection

Accepted Answer

The Answer of direct and inverse is...

In a comparison between MPU sampling and PPS sampling, an explicit statement is required in MPU plans, but not PPS plans, for:

Whenever sampling is used in an audit procedure, uncertainty will be present. The two sources of this uncertainty are:

Identify the factors in the PPS sample size formula that have: 1.a direct effect and 2.an inverse effect on sample size.

The auditor has decided to use PPS sampling in the confirmation of individual sales transactions with customers. The population and the logical sampling unit are most likely to be, respectively:

The normal distribution underlies:

Which of the following is not an advantage of probability-proportional-to-size (PPS) sampling?

Probability-proportional-to-size (PPS) sampling should not be used when:

Stating the expansion factor is required in all PPS sampling plans.

The reliability factor is based on the risk of:

In MPU sampling, the auditor should consider the qualitative aspects of the sample results prior to reaching an overall conclusion.

In PPS sampling plans, basic precision is:

Which of the following is least likely to be listed as an advantage of PPS sampling over classical variables sampling?

In PPS sampling plans, the effect population book value has on sample size is:

The most common objective of PPS sampling plans is to:

Short Answer 13-3 (5 minutes) 1.Identify the calculations that are required in making a quantitative assessment of the sample results in an MPU sampling plan. 2.Indicate the purpose and the formula for calculating the adjusted achieved allowance for sampling risk.

In determining sample size in nonstatistical sampling, the auditor should consider the same factors used in statistical sampling.

One disadvantage of PPS sampling is that when overstatements are identified, the evaluation of the sample may require special consideration.

In PPS sampling plans, the risk of incorrect rejection is:

Audit sampling applies to control risk and detection risk.

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 13: Audit Sampling in Substantive Tests

In a comparison between MPU sampling and PPS sampling, an explicit statement is required in MPU plans, but not PPS plans, for:

Whenever sampling is used in an audit procedure, uncertainty will be present. The two sources of this uncertainty are:

Identify the factors in the PPS sample size formula that have: 1.a direct effect and 2.an inverse effect on sample size.

The auditor has decided to use PPS sampling in the confirmation of individual sales transactions with customers. The population and the logical sampling unit are most likely to be, respectively:

The normal distribution underlies:

Which of the following is not an advantage of probability-proportional-to-size (PPS) sampling?

Probability-proportional-to-size (PPS) sampling should not be used when:

Stating the expansion factor is required in all PPS sampling plans.

The reliability factor is based on the risk of:

In MPU sampling, the auditor should consider the qualitative aspects of the sample results prior to reaching an overall conclusion.

In PPS sampling plans, basic precision is:

Which of the following is least likely to be listed as an advantage of PPS sampling over classical variables sampling?

In PPS sampling plans, the effect population book value has on sample size is:

The most common objective of PPS sampling plans is to:

Short Answer 13-3 (5 minutes) 1.Identify the calculations that are required in making a quantitative assessment of the sample results in an MPU sampling plan. 2.Indicate the purpose and the formula for calculating the adjusted achieved allowance for sampling risk.

In determining sample size in nonstatistical sampling, the auditor should consider the same factors used in statistical sampling.

One disadvantage of PPS sampling is that when overstatements are identified, the evaluation of the sample may require special consideration.

In PPS sampling plans, the risk of incorrect rejection is:

Audit sampling applies to control risk and detection risk.

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters