Question 1

Discuss what is meant by 'sampling error'.

Accepted Answer

Sampling error occurs when the

Question 2

An auditor using non-statistical sampling cannot formally measure sampling error.

Accepted Answer

A) True 
 B)False

Question 3

When the auditor intends to evaluate a sample statistically, the only acceptable selection method is:

Accepted Answer

A)  probabilistic selection. 
B)  block sample selection. 
C)  judgemental selection. 
D)  haphazard selection. 
A)  probabilistic selection. 
B)  block sample selection. 
C)  judgemental selection. 
D)  haphazard selection.

Question 4

Identify each of the eight factors that influence sample size for non-statistical tests of details of balances, and state whether each factor is directly or inversely related to sample size.

Accepted Answer

The following eight factors influence sa

Question 5

Acceptable risk of incorrect acceptance is the risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than the estimated misstatement in the population.

Accepted Answer

A) True 
 B)False

Question 6

Discuss what is meant by 'non-sampling risk'.

Accepted Answer

Non-sampling error o

Question 7

Since auditors are interested in the occurrence of deviations in populations, they refer to the occurrence rate as the:

Accepted Answer

A)  deviation rate. 
B)  confidence level. 
C)  populations rate. 
D)  probability rate. 
A)  deviation rate. 
B)  confidence level. 
C)  populations rate. 
D)  probability rate.

Question 8

When using monetary-unit sampling, evaluating the likelihood of unrecorded items in the population is:

Accepted Answer

A)  an automatic outcome of the process. 
B)  necessary. 
C)  impossible. 
D)  possible but difficult. 
A)  an automatic outcome of the process. 
B)  necessary. 
C)  impossible. 
D)  possible but difficult.

Question 9

An increase in sample size has the effect of decreasing the sampling error if the actual sample deviation rate remains constant.

Accepted Answer

A) True 
 B)False

Question 10

The deviation rate the auditor will permit in the population and still be willing to use the assessed level of control risk established during planning is called the:

Accepted Answer

A)  tolerable deviation rate (TDR). 
B)  sample deviation rate (SDR). 
C)  acceptable risk of overreliance (ARO). 
D)  estimated population deviation rate. 
A)  tolerable deviation rate (TDR). 
B)  sample deviation rate (SDR). 
C)  acceptable risk of overreliance (ARO). 
D)  estimated population deviation rate.

Question 11

When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, it is called:

Accepted Answer

A)  block sample selection. 
B)  statistical selection. 
C)  systematic sample selection. 
D)  haphazard selection. 
A)  block sample selection. 
B)  statistical selection. 
C)  systematic sample selection. 
D)  haphazard selection.

Question 12

Which one is NOT a sample selection method commonly associated with non-statistical audit units?

Accepted Answer

A)  haphazard sample selection 
B)  probability proportional to size sample selection 
C)  directed sample selection 
D)  block sample selection 
A)  haphazard sample selection 
B)  probability proportional to size sample selection 
C)  directed sample selection 
D)  block sample selection

Question 13

Which one of the following statements regarding the process of defining the population is NOT correct? The

Accepted Answer

A)  population represents the body of data about which the auditor wishes to generalise. 
B)  auditor can define the population to include whatever data is desired. 
C)  auditor can randomly sample from whatever part of the population he or she chooses. 
D)  auditor may generalise only about that population which has been sampled. 
A)  population represents the body of data about which the auditor wishes to generalise. 
B)  auditor can define the population to include whatever data is desired. 
C)  auditor can randomly sample from whatever part of the population he or she chooses. 
D)  auditor may generalise only about that population which has been sampled.

Question 14

A method of sampling in which all the items in the population are divided into two or more subpopulations is:

Accepted Answer

A)  attributes sampling. 
B)  stratified sampling. 
C)  divisible sampling. 
D)  variables sampling. 
A)  attributes sampling. 
B)  stratified sampling. 
C)  divisible sampling. 
D)  variables sampling.

Question 15

The use of monetary-unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

Accepted Answer

A) True 
 B)False

Question 16

When selecting a stratified sample, the sample size is:

Accepted Answer

A)  determined for the unstratified population and then apportioned to each stratum. 
B)  determined for each stratum and selected from that stratum. 
C)  determined for each stratum and selected randomly from the entire unstratified population. 
D)  always larger than if unstratified sampling had been used. 
A)  determined for the unstratified population and then apportioned to each stratum. 
B)  determined for each stratum and selected from that stratum. 
C)  determined for each stratum and selected randomly from the entire unstratified population. 
D)  always larger than if unstratified sampling had been used.

Question 17

Acceptable risk of assessing control risk too low is the risk that the auditor is willing to take of accepting a control as effective when the true population deviation rate is greater than the estimated population deviation rate.

Accepted Answer

A) True 
 B)False

Question 18

The tolerable deviation rate (TDR)has a significant effect on sample size.The relationship of TDR to sample size is:

Accepted Answer

A)  inverse (larger TDR = smaller sample). 
B)  direct (larger TDR = larger sample). 
C)  variable (sometimes larger, sometimes smaller). 
D)  not determinable. 
A)  inverse (larger TDR = smaller sample). 
B)  direct (larger TDR = larger sample). 
C)  variable (sometimes larger, sometimes smaller). 
D)  not determinable.

Question 19

Tolerable deviation rate (TDR)is inversely related to sample size; that is, as TDR increases, sample size decreases.

Accepted Answer

A) True 
 B)False

Question 20

Audit sampling would be an appropriate method to use on which one of the following procedures in an audit program?

Accepted Answer

A)  Review the aged schedule of accounts receivable to determine if receivables from officers are included. 
B)  Review sales transactions for large and unreasonable amounts. 
C)  Examine a sample of duplicate sales invoices for credit approval by the credit manager. 
D)  Observe whether the duties of the accounts receivable clerk are separate from handling cash. 
A)  Review the aged schedule of accounts receivable to determine if receivables from officers are included. 
B)  Review sales transactions for large and unreasonable amounts. 
C)  Examine a sample of duplicate sales invoices for credit approval by the credit manager. 
D)  Observe whether the duties of the accounts receivable clerk are separate from handling cash.

Discuss what is meant by 'sampling error'.

An auditor using non-statistical sampling cannot formally measure sampling error.

When the auditor intends to evaluate a sample statistically, the only acceptable selection method is:

Identify each of the eight factors that influence sample size for non-statistical tests of details of balances, and state whether each factor is directly or inversely related to sample size.

Acceptable risk of incorrect acceptance is the risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than the estimated misstatement in the population.

Discuss what is meant by 'non-sampling risk'.

Since auditors are interested in the occurrence of deviations in populations, they refer to the occurrence rate as the:

When using monetary-unit sampling, evaluating the likelihood of unrecorded items in the population is:

An increase in sample size has the effect of decreasing the sampling error if the actual sample deviation rate remains constant.

The deviation rate the auditor will permit in the population and still be willing to use the assessed level of control risk established during planning is called the:

When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, it is called:

Which one is NOT a sample selection method commonly associated with non-statistical audit units?

Which one of the following statements regarding the process of defining the population is NOT correct? The

A method of sampling in which all the items in the population are divided into two or more subpopulations is:

The use of monetary-unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

When selecting a stratified sample, the sample size is:

Acceptable risk of assessing control risk too low is the risk that the auditor is willing to take of accepting a control as effective when the true population deviation rate is greater than the estimated population deviation rate.

The tolerable deviation rate (TDR)has a significant effect on sample size.The relationship of TDR to sample size is:

Tolerable deviation rate (TDR)is inversely related to sample size; that is, as TDR increases, sample size decreases.

Audit sampling would be an appropriate method to use on which one of the following procedures in an audit program?

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

Discuss what is meant by 'sampling error'.

An auditor using non-statistical sampling cannot formally measure sampling error.

When the auditor intends to evaluate a sample statistically, the only acceptable selection method is:

Identify each of the eight factors that influence sample size for non-statistical tests of details of balances, and state whether each factor is directly or inversely related to sample size.

Acceptable risk of incorrect acceptance is the risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than the estimated misstatement in the population.

Discuss what is meant by 'non-sampling risk'.

Since auditors are interested in the occurrence of deviations in populations, they refer to the occurrence rate as the:

When using monetary-unit sampling, evaluating the likelihood of unrecorded items in the population is:

An increase in sample size has the effect of decreasing the sampling error if the actual sample deviation rate remains constant.

The deviation rate the auditor will permit in the population and still be willing to use the assessed level of control risk established during planning is called the:

When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, it is called:

Which one is NOT a sample selection method commonly associated with non-statistical audit units?

Which one of the following statements regarding the process of defining the population is NOT correct? The

A method of sampling in which all the items in the population are divided into two or more subpopulations is:

The use of monetary-unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

When selecting a stratified sample, the sample size is:

Acceptable risk of assessing control risk too low is the risk that the auditor is willing to take of accepting a control as effective when the true population deviation rate is greater than the estimated population deviation rate.

The tolerable deviation rate (TDR)has a significant effect on sample size.The relationship of TDR to sample size is:

Tolerable deviation rate (TDR)is inversely related to sample size; that is, as TDR increases, sample size decreases.

Audit sampling would be an appropriate method to use on which one of the following procedures in an audit program?

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