Question 1

Non-statistical sampling may be better to use than statistical sampling when ________.

Accepted Answer

A) the auditor has insufficient knowledge about the population to take a statistical sample 
B) the inherent risk of error in the population is low 
C) the population is known to be diverse,with a high inherent risk of error 
D) auditors are not technically proficient in sampling 
A) the auditor has insufficient knowledge about the population to take a statistical sample 
B) the inherent risk of error in the population is low 
C) the population is known to be diverse,with a high inherent risk of error 
D) auditors are not technically proficient in sampling C

Question 2

Non-statistical sampling is audit sampling in which auditors do not use the probability calculations to express the results.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is a term used to describe a departure from a prescribed internal control procedure?

Accepted Answer

A) Exception. 
B) Event. 
C) Misstatement. 
D) Known error. 
A) Exception. 
B) Event. 
C) Misstatement. 
D) Known error. A

Question 4

In making a decision about the extent of misstatement in a population,the known misstatement in the sample must be projected to the population.

Accepted Answer

A) True 
 B)False

Question 5

The risk of assessing control risk too low can lead to ________.

Accepted Answer

A) the auditor performing more work than needed,thus wasting resources 
B) the auditor failing to do additional work that should be done 
C) poor choice of procedures 
D) expanding sample sizes required for statistical sampling of account balances 
A) the auditor performing more work than needed,thus wasting resources 
B) the auditor failing to do additional work that should be done 
C) poor choice of procedures 
D) expanding sample sizes required for statistical sampling of account balances

Question 6

Auditing a larger sample reduces the probability of reaching a wrong conclusion about the effectiveness of an internal control.

Accepted Answer

A) True 
 B)False

Question 7

The sample deviation rate is the best single-point estimate of the actual,but unknown,deviation rate in the population.

Accepted Answer

A) True 
 B)False

Question 8

A number of factors can affect the size of a sample for a substantive audit of the details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Accepted Answer

A) A lower assessed level of control risk. 
B) Using a larger number of effective analytical procedures to obtain evidence about particular assertions. 
C) Smaller expected frequency of account item errors. 
D) Smaller measure of tolerable misstatement. 
A) A lower assessed level of control risk. 
B) Using a larger number of effective analytical procedures to obtain evidence about particular assertions. 
C) Smaller expected frequency of account item errors. 
D) Smaller measure of tolerable misstatement.

Question 9

Assessing control risk too low threatens the efficiency of the audit but not the effectiveness.

Accepted Answer

A) True 
 B)False

Question 10

If statistical calculations were not applied,then a sampling method would be considered non-statistical,even though a random sample was selected.

Accepted Answer

A) True 
 B)False

Question 11

In specifying the objectives for substantive testing of accounts receivable,an auditor hypothesizes that the company does not have a right to collect the money,and looks for evidence that they do.

Accepted Answer

A) True 
 B)False

Question 12

As a result of tests of controls,an auditor assessed control risk too low and decreased substantive testing.This assessment resulted because the true deviation rate in the population was ________.

Accepted Answer

A) more than the risk of assessing control risk too low based on the auditor's sample 
B) less than the risk of assessing control risk too low based on the auditor's sample 
C) more than the deviation rate in the auditor's sample 
D) less than the deviation rate in the auditor's sample 
A) more than the risk of assessing control risk too low based on the auditor's sample 
B) less than the risk of assessing control risk too low based on the auditor's sample 
C) more than the deviation rate in the auditor's sample 
D) less than the deviation rate in the auditor's sample

Question 13

Assume several auditors selected various unrestricted,unstratified random samples from a population of 1,200 customers' accounts receivable with a recorded value of $480,000.The results of their tests are shown in the table below.
Projected Likely Misstatement
Overstatement (Understatement)
 $\begin{array}{|l|l|l|l|l|}
\hline\text { Sample Size } & \text { Recorded Balances } & \text { Audited Balances } & \text { Avg. Diff. Meth. DUS } \
&&&\text { Method }\
\hline 1.150 & \$ 60,600 & \$ 60,000 & \$\quad\quad & \$\quad \
\hline 2.200 & \$ 81,000 & \$ 80,400 & \$ & \$ \
\hline 3.240 & \$ 97,200 & \$ 98,000 & \$ & \$ \
\hline 4.300 & \$ 120,366 & \$ 120,000 & \$ & \$ \
\hline 5.340 & \$ 135,320 & \$ 133,620 & \$ & \$\
\hline
\end{array}$

Accepted Answer

Required:
For each of the sample sizes,c

Question 14

The risk of assessing control risk too high is the risk that the evidence of compliance with control procedures in the sample indicates ________.

Accepted Answer

A) low control risk when the actual degree of compliance does not justify a low control risk assessment 
B) low control risk when the actual degree of compliance justifies a low control risk assessment 
C) high control risk when the actual degree of compliance would justify a lower control risk assessment 
D) high control risk when the actual degree of compliance would justify a higher control risk assessment 
A) low control risk when the actual degree of compliance does not justify a low control risk assessment 
B) low control risk when the actual degree of compliance justifies a low control risk assessment 
C) high control risk when the actual degree of compliance would justify a lower control risk assessment 
D) high control risk when the actual degree of compliance would justify a higher control risk assessment

Question 15

When evaluating the results of substantive audit procedures,auditors run the sampling risk(s)of ________.

Accepted Answer

A) assessing control risk too high or too low 
B) incorrect acceptance and incorrect rejection of the population 
C) assessing control risk too low only 
D) incorrect acceptance of the population only 
A) assessing control risk too high or too low 
B) incorrect acceptance and incorrect rejection of the population 
C) assessing control risk too low only 
D) incorrect acceptance of the population only

Question 16

The total amount of monetary error that is found in a sample is referred to as the ________.

Accepted Answer

A) projected likely misstatement 
B) tolerable misstatement 
C) known misstatement 
D) possible misstatement 
A) projected likely misstatement 
B) tolerable misstatement 
C) known misstatement 
D) possible misstatement

Question 17

Attribute sampling is audit sampling in which auditors look for the presence or absence of a control condition.

Accepted Answer

A) True 
 B)False

Question 18

In auditing,anomalies can be defined as: _____.

Accepted Answer

A) Items that fall outside a statistically set range of possible results. 
B) Items that,in the auditor's judgement,should not be projected to the rest of the population. 
C) Items that exceed materiality. 
D) Items forming part of a specific items sample selection. 
A) Items that fall outside a statistically set range of possible results. 
B) Items that,in the auditor's judgement,should not be projected to the rest of the population. 
C) Items that exceed materiality. 
D) Items forming part of a specific items sample selection.

Question 19

Each of the elements within the set of all elements that comprise an account balance or a class of transactions is referred to as a ________.

Accepted Answer

A) sampling unit 
B) sample 
C) population unit 
D) population 
A) sampling unit 
B) sample 
C) population unit 
D) population

Question 20

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to ________.

Accepted Answer

A) minimize the failure to detect errors and irregularities 
B) eliminate the risk of non-sampling errors 
C) reduce the level of audit risk and materiality to a relatively low amount 
D) make a preliminary estimate of the appropriate sample size 
A) minimize the failure to detect errors and irregularities 
B) eliminate the risk of non-sampling errors 
C) reduce the level of audit risk and materiality to a relatively low amount 
D) make a preliminary estimate of the appropriate sample size

Non-statistical sampling may be better to use than statistical sampling when ________.

Non-statistical sampling is audit sampling in which auditors do not use the probability calculations to express the results.

Which of the following is a term used to describe a departure from a prescribed internal control procedure?

In making a decision about the extent of misstatement in a population,the known misstatement in the sample must be projected to the population.

The risk of assessing control risk too low can lead to ________.

Auditing a larger sample reduces the probability of reaching a wrong conclusion about the effectiveness of an internal control.

The sample deviation rate is the best single-point estimate of the actual,but unknown,deviation rate in the population.

A number of factors can affect the size of a sample for a substantive audit of the details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Assessing control risk too low threatens the efficiency of the audit but not the effectiveness.

If statistical calculations were not applied,then a sampling method would be considered non-statistical,even though a random sample was selected.

In specifying the objectives for substantive testing of accounts receivable,an auditor hypothesizes that the company does not have a right to collect the money,and looks for evidence that they do.

As a result of tests of controls,an auditor assessed control risk too low and decreased substantive testing.This assessment resulted because the true deviation rate in the population was ________.

The risk of assessing control risk too high is the risk that the evidence of compliance with control procedures in the sample indicates ________.

When evaluating the results of substantive audit procedures,auditors run the sampling risk(s)of ________.

The total amount of monetary error that is found in a sample is referred to as the ________.

Attribute sampling is audit sampling in which auditors look for the presence or absence of a control condition.

In auditing,anomalies can be defined as: _____.

Each of the elements within the set of all elements that comprise an account balance or a class of transactions is referred to as a ________.

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

The Revenues, receivables, and Receipts Process and Cash Account Balance

The Purchases, payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, including Fraud Auditing

Filters

Exam 10: Audit Sampling

Non-statistical sampling may be better to use than statistical sampling when ________.

Non-statistical sampling is audit sampling in which auditors do not use the probability calculations to express the results.

Which of the following is a term used to describe a departure from a prescribed internal control procedure?

In making a decision about the extent of misstatement in a population,the known misstatement in the sample must be projected to the population.

The risk of assessing control risk too low can lead to ________.

Auditing a larger sample reduces the probability of reaching a wrong conclusion about the effectiveness of an internal control.

The sample deviation rate is the best single-point estimate of the actual,but unknown,deviation rate in the population.

A number of factors can affect the size of a sample for a substantive audit of the details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Assessing control risk too low threatens the efficiency of the audit but not the effectiveness.

If statistical calculations were not applied,then a sampling method would be considered non-statistical,even though a random sample was selected.

In specifying the objectives for substantive testing of accounts receivable,an auditor hypothesizes that the company does not have a right to collect the money,and looks for evidence that they do.

As a result of tests of controls,an auditor assessed control risk too low and decreased substantive testing.This assessment resulted because the true deviation rate in the population was ________.

The risk of assessing control risk too high is the risk that the evidence of compliance with control procedures in the sample indicates ________.

When evaluating the results of substantive audit procedures,auditors run the sampling risk(s)of ________.

The total amount of monetary error that is found in a sample is referred to as the ________.

Attribute sampling is audit sampling in which auditors look for the presence or absence of a control condition.

In auditing,anomalies can be defined as: _____.

Each of the elements within the set of all elements that comprise an account balance or a class of transactions is referred to as a ________.

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

The Revenues, receivables, and Receipts Process and Cash Account Balance

The Purchases, payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, including Fraud Auditing

Filters