Question 1

Which one of the following is an advantage of systematic sample selection over random number sampling?

Accepted Answer

A)  There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. 
B)  It does not require establishment of correspondence between random numbers and items in the population. 
C)  It provides a stronger basis for statistical conclusions. 
D)  It enables the auditor to use the more efficient sampling with replacement tables. 
A)  There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. 
B)  It does not require establishment of correspondence between random numbers and items in the population. 
C)  It provides a stronger basis for statistical conclusions. 
D)  It enables the auditor to use the more efficient sampling with replacement tables.

Question 2

Stratification allows the auditor to emphasise particular population items.

Accepted Answer

A) True 
 B)False

Question 3

Discuss the four factors that affect the auditor's acceptable risk of incorrect acceptance (ARIA).

Accepted Answer

The four factors that affect ARIA are as

Question 4

The advantage of systematic sample selection is that:

Accepted Answer

A)  it is easy to use. 
B)  it is unnecessary to determine if the population is arranged randomly. 
C)  there is limited possibility of it being biased. 
D)  all of the above 
A)  it is easy to use. 
B)  it is unnecessary to determine if the population is arranged randomly. 
C)  there is limited possibility of it being biased. 
D)  all of the above

Question 5

Explain what is meant by 'directed sample selection'.

Accepted Answer

In directed sample selection,

Question 6

There are 14 steps to audit sampling for tests of controls and substantive tests of transactions.These are divided into three sections: plan the sample, select the sample and perform the audit procedures, and evaluate the results.Discuss each of the steps that comprise the 'evaluate the results' section.

Accepted Answer

The steps that comprise the 'evaluate th

Question 7

An example of sampling for attributes would be estimating the:

Accepted Answer

A)  probability of losing a patent infringement case. 
B)  percentage of sales invoices with no accompanying shipping documents. 
C)  quantity of specific inventory items. 
D)  dollar value of accounts receivable. 
A)  probability of losing a patent infringement case. 
B)  percentage of sales invoices with no accompanying shipping documents. 
C)  quantity of specific inventory items. 
D)  dollar value of accounts receivable.

Question 8

Match between columns
                        Premises: a method of variables sampling in which the auditor estimates the population misstatement by multiplying the average misstatement in the sample by the total number of populations items, and also calculates sampling risk
the risk that the auditor is willing to take of concluding a balance is materially misstated when it is, in fact, fairly stated
a method of sampling in which all the elements in the total population are divided into two or more subpopulations that are independently tested and statistically measured
a method of projecting from the sample to the population to estimate the population misstatement, commonly by assuming that misstatements in the unaudited population are proportional to the misstatements found in the sample
a method of variables sampling in which the auditor estimates the population misstatement by multiplying the portion of sample dollars misstated by the total recorded population book value, and also calculates sampling risk

Accepted Answer

The Answer of point estimate and mean-per-unit estimation and variable is...

Question 9

The use of haphazard sample selection is allowed under current professional auditing standards.

Accepted Answer

A) True 
 B)False

Question 10

If a particular internal control is not followed by the client exactly 6% of the time, and the auditor's tests of that control find 3 control violations in a sample of 50, the sample is considered to be non-representative.

Accepted Answer

A) True 
 B)False

Question 11

The allowable risk of overreliance (ARO)has a significant effect on sample size.The relationship of ARO to sample size is:

Accepted Answer

A)  variable (sometimes larger, sometimes smaller). 
B)  nonexistent. 
C)  inverse (larger ARO = smaller sample). 
D)  direct (larger ARO = larger sample). 
A)  variable (sometimes larger, sometimes smaller). 
B)  nonexistent. 
C)  inverse (larger ARO = smaller sample). 
D)  direct (larger ARO = larger sample).

Question 12

Describe each of the three types of sample selection methods commonly associated with non-statistical audit sampling.

Accepted Answer

Three types of sample selection methods

Question 13

When the computed upper deviation rate is greater than the tolerable deviation rate in attributes sampling, one possible appropriate course of action is to increase sample size.

Accepted Answer

A) True 
 B)False

Question 14

If an auditor, planning to use statistical sampling, is concerned with the dollar value of mathematical errors in sales invoices, the auditor would most likely NOT utilise:

Accepted Answer

A)  sampling for attributes. 
B)  sampling for variables. 
C)  stratified random sampling. 
D)  random sampling. 
A)  sampling for attributes. 
B)  sampling for variables. 
C)  stratified random sampling. 
D)  random sampling.

Question 15

The final step in the evaluation of the audit results is the decision to:

Accepted Answer

A)  determine the error in each sample. 
B)  project the point estimate. 
C)  determine sampling error and calculate the estimated total population error. 
D)  decide the acceptability of the population. 
A)  determine the error in each sample. 
B)  project the point estimate. 
C)  determine sampling error and calculate the estimated total population error. 
D)  decide the acceptability of the population.

Question 16

The point estimate, by itself, is NOT an adequate measure of the population misstatement because of:

Accepted Answer

A)  population biases. 
B)  control risk. 
C)  sampling error. 
D)  audit risk. 
A)  population biases. 
B)  control risk. 
C)  sampling error. 
D)  audit risk.

Question 17

A sample in which the characteristics of the sample are the same as those of the population is:

Accepted Answer

A)  an attributes sample. 
B)  a variables sample. 
C)  a representative sample. 
D)  a random sample. 
A)  an attributes sample. 
B)  a variables sample. 
C)  a representative sample. 
D)  a random sample.

Question 18

Monetary-unit sampling is most commonly used when:

Accepted Answer

A)  the population data are maintained on computer files. 
B)  zero or few exceptions are expected. 
C)  a dollar result is desired. 
D)  all of the above 
A)  the population data are maintained on computer files. 
B)  zero or few exceptions are expected. 
C)  a dollar result is desired. 
D)  all of the above

Question 19

It is equally acceptable under professional auditing standards for auditors to use either statistical or non-statistical sampling methods.

Accepted Answer

A) True 
 B)False

Question 20

Match between columns
                        Premises: a non-probabilistic method of sample selection in which items are chosen without regard to their size, source, or other distinguishing characteristics.
a sample whose characteristics are the same as those of the population
a statistical, probabilistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic of interest
the use of mathematical measurement techniques to calculate formal statistical results and quantify sampling risk
a non-probabilistic method of sample selection in which items are selected in measured sequences

Accepted Answer

The Answer of haphazard selection and non-probabilistic sample selection and is...

Which one of the following is an advantage of systematic sample selection over random number sampling?

Stratification allows the auditor to emphasise particular population items.

Discuss the four factors that affect the auditor's acceptable risk of incorrect acceptance (ARIA).

The advantage of systematic sample selection is that:

Explain what is meant by 'directed sample selection'.

An example of sampling for attributes would be estimating the:

The use of haphazard sample selection is allowed under current professional auditing standards.

If a particular internal control is not followed by the client exactly 6% of the time, and the auditor's tests of that control find 3 control violations in a sample of 50, the sample is considered to be non-representative.

The allowable risk of overreliance (ARO)has a significant effect on sample size.The relationship of ARO to sample size is:

Describe each of the three types of sample selection methods commonly associated with non-statistical audit sampling.

When the computed upper deviation rate is greater than the tolerable deviation rate in attributes sampling, one possible appropriate course of action is to increase sample size.

If an auditor, planning to use statistical sampling, is concerned with the dollar value of mathematical errors in sales invoices, the auditor would most likely NOT utilise:

The final step in the evaluation of the audit results is the decision to:

The point estimate, by itself, is NOT an adequate measure of the population misstatement because of:

A sample in which the characteristics of the sample are the same as those of the population is:

Monetary-unit sampling is most commonly used when:

It is equally acceptable under professional auditing standards for auditors to use either statistical or non-statistical sampling methods.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 14: Audit sampling

Which one of the following is an advantage of systematic sample selection over random number sampling?

Stratification allows the auditor to emphasise particular population items.

Discuss the four factors that affect the auditor's acceptable risk of incorrect acceptance (ARIA).

The advantage of systematic sample selection is that:

Explain what is meant by 'directed sample selection'.

An example of sampling for attributes would be estimating the:

The use of haphazard sample selection is allowed under current professional auditing standards.

If a particular internal control is not followed by the client exactly 6% of the time, and the auditor's tests of that control find 3 control violations in a sample of 50, the sample is considered to be non-representative.

The allowable risk of overreliance (ARO)has a significant effect on sample size.The relationship of ARO to sample size is:

Describe each of the three types of sample selection methods commonly associated with non-statistical audit sampling.

When the computed upper deviation rate is greater than the tolerable deviation rate in attributes sampling, one possible appropriate course of action is to increase sample size.

If an auditor, planning to use statistical sampling, is concerned with the dollar value of mathematical errors in sales invoices, the auditor would most likely NOT utilise:

The final step in the evaluation of the audit results is the decision to:

The point estimate, by itself, is NOT an adequate measure of the population misstatement because of:

A sample in which the characteristics of the sample are the same as those of the population is:

Monetary-unit sampling is most commonly used when:

It is equally acceptable under professional auditing standards for auditors to use either statistical or non-statistical sampling methods.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters