Question 1

A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameter is the:

Accepted Answer

A)  sampling distribution. 
B)  population distribution. 
C)  sample size. 
D)  sample deviation rate. 
A)  sampling distribution. 
B)  population distribution. 
C)  sample size. 
D)  sample deviation rate.

Question 2

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

Accepted Answer

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

Question 3

Which one of the following statements regarding monetary-unit sampling (MUS)is NOT true?

Accepted Answer

A)  An account with a large balance has a greater chance of being included in the sample than an account with a small balance. 
B)  There is no need to use stratified sampling with MUS; it occurs automatically. 
C)  MUS automatically places emphasis on physical units with larger recorded balances. 
D)  The sampling unit in MUS is the account balance. 
A)  An account with a large balance has a greater chance of being included in the sample than an account with a small balance. 
B)  There is no need to use stratified sampling with MUS; it occurs automatically. 
C)  MUS automatically places emphasis on physical units with larger recorded balances. 
D)  The sampling unit in MUS is the account balance.

Question 4

For tests of details of balances, a lower frequency of misstatements can result in smaller sample sizes.

Accepted Answer

A) True 
 B)False

Question 5

Discuss two ways in which the auditor can control sampling risk.

Accepted Answer

The auditor can control sampli

Question 6

The auditor must deal with layers of the computed upper deviation rate (CUDR)from the attributes table because there are different error assumptions for each error.Assume a sample of 100 had found 1 error, and the computed upper deviation rate is shown in the following table:
 
What is the CUDR layer for the first mistake?

Accepted Answer

A)  6.1% 
B)  1.5% 
C)  3.8% 
D)  2.3% 
A)  6.1% 
B)  1.5% 
C)  3.8% 
D)  2.3%

Question 7

When an auditor performs tests of details of balances, the concern is determining:

Accepted Answer

A)  both the effectiveness of controls and the monetary correctness of the transactions. 
B)  whether the deviation rate in the population is sufficiently low to justify reducing substantive testing. 
C)  whether the account balance being audited is fairly stated. 
D)  all of the above 
A)  both the effectiveness of controls and the monetary correctness of the transactions. 
B)  whether the deviation rate in the population is sufficiently low to justify reducing substantive testing. 
C)  whether the account balance being audited is fairly stated. 
D)  all of the above

Question 8

How are tests of controls affected when the auditor decides to assess control risk at the maximum level?

Accepted Answer

A)  increased in number 
B)  reduced in number 
C)  not performed 
D)  unchanged from prior planned settings 
A)  increased in number 
B)  reduced in number 
C)  not performed 
D)  unchanged from prior planned settings

Question 9

Establishing the tolerable deviation rate (TDR)requires:

Accepted Answer

A)  auditor judgement. 
B)  a computer program. 
C)  random number tables. 
D)  statistical frequency probability tables. 
A)  auditor judgement. 
B)  a computer program. 
C)  random number tables. 
D)  statistical frequency probability tables.

Question 10

In monetary-unit sampling, the values of the estimated likely maximum misstatements are referred to as the:

Accepted Answer

A)  point estimates. 
B)  misstatement bounds. 
C)  confidence intervals. 
D)  precision intervals. 
A)  point estimates. 
B)  misstatement bounds. 
C)  confidence intervals. 
D)  precision intervals.

Question 11

Sampling error and non-sampling error can each cause a sample result to be non-representative.

Accepted Answer

A) True 
 B)False

Question 12

Explain the rule used in monetary-unit sampling to decide whether the population is acceptable.

Accepted Answer

The auditor will accept the conclusion t

Question 13

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

Accepted Answer

A) True 
 B)False

Question 14

A sample of all items in a population will have a zero sampling risk.

Accepted Answer

A) True 
 B)False

Question 15

Acceptable risk of assessing control risk too low (ARO)and allowable risk of incorrect acceptance (ARIA)are inversely related; that is, a decrease in ARO is accompanied by an increase in ARIA.

Accepted Answer

A) True 
 B)False

Question 16

Non-sampling errors occur when audit tests do NOT uncover existing exceptions in the:

Accepted Answer

A)  planning stage. 
B)  population. 
C)  financial statements. 
D)  sample. 
A)  planning stage. 
B)  population. 
C)  financial statements. 
D)  sample.

Question 17

In audit sampling, an advance estimate of the deviation rate is necessary to plan the appropriate sample size.The relationship of estimated population deviation rate (EPDR)to sample size is:

Accepted Answer

A)  direct (small EPDR = small sample). 
B)  indeterminate. 
C)  inverse (small EPDR = large sample). 
D)  a variable (sometimes small, sometimes large) dependent on other factors present. 
A)  direct (small EPDR = small sample). 
B)  indeterminate. 
C)  inverse (small EPDR = large sample). 
D)  a variable (sometimes small, sometimes large) dependent on other factors present.

Question 18

What is the most important aspect of audit sampling?

Accepted Answer

A)  evaluating the results 
B)  sample selection 
C)  performing the audit procedures 
D)  all of the above 
A)  evaluating the results 
B)  sample selection 
C)  performing the audit procedures 
D)  all of the above

Question 19

When monetary-unit sampling is used to audit accounts receivable, a customer's account with a small year-end balance has the same chance of being included in the sample as a customer's account with a large year-end balance.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following BEST illustrates the concept of sampling risk?

Accepted Answer

A)  The documents related to the chosen sample may not be available for inspection. 
B)  An auditor may select audit procedures that are not appropriate to achieve the specific objective. 
C)  A randomly chosen sample may not be representative of the population as a whole on the characteristics of interest. 
D)  An auditor may fail to recognise errors in the documents examined for the chosen sample. 
A)  The documents related to the chosen sample may not be available for inspection. 
B)  An auditor may select audit procedures that are not appropriate to achieve the specific objective. 
C)  A randomly chosen sample may not be representative of the population as a whole on the characteristics of interest. 
D)  An auditor may fail to recognise errors in the documents examined for the chosen sample.

A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameter is the:

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

Which one of the following statements regarding monetary-unit sampling (MUS)is NOT true?

For tests of details of balances, a lower frequency of misstatements can result in smaller sample sizes.

Discuss two ways in which the auditor can control sampling risk.

When an auditor performs tests of details of balances, the concern is determining:

How are tests of controls affected when the auditor decides to assess control risk at the maximum level?

Establishing the tolerable deviation rate (TDR)requires:

In monetary-unit sampling, the values of the estimated likely maximum misstatements are referred to as the:

Sampling error and non-sampling error can each cause a sample result to be non-representative.

Explain the rule used in monetary-unit sampling to decide whether the population is acceptable.

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

A sample of all items in a population will have a zero sampling risk.

Acceptable risk of assessing control risk too low (ARO)and allowable risk of incorrect acceptance (ARIA)are inversely related; that is, a decrease in ARO is accompanied by an increase in ARIA.

Non-sampling errors occur when audit tests do NOT uncover existing exceptions in the:

In audit sampling, an advance estimate of the deviation rate is necessary to plan the appropriate sample size.The relationship of estimated population deviation rate (EPDR)to sample size is:

What is the most important aspect of audit sampling?

When monetary-unit sampling is used to audit accounts receivable, a customer's account with a small year-end balance has the same chance of being included in the sample as a customer's account with a large year-end balance.

Which one of the following BEST illustrates the concept of sampling risk?

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

A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameter is the:

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

Which one of the following statements regarding monetary-unit sampling (MUS)is NOT true?

For tests of details of balances, a lower frequency of misstatements can result in smaller sample sizes.

Discuss two ways in which the auditor can control sampling risk.

When an auditor performs tests of details of balances, the concern is determining:

How are tests of controls affected when the auditor decides to assess control risk at the maximum level?

Establishing the tolerable deviation rate (TDR)requires:

In monetary-unit sampling, the values of the estimated likely maximum misstatements are referred to as the:

Sampling error and non-sampling error can each cause a sample result to be non-representative.

Explain the rule used in monetary-unit sampling to decide whether the population is acceptable.

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

A sample of all items in a population will have a zero sampling risk.

Acceptable risk of assessing control risk too low (ARO)and allowable risk of incorrect acceptance (ARIA)are inversely related; that is, a decrease in ARO is accompanied by an increase in ARIA.

Non-sampling errors occur when audit tests do NOT uncover existing exceptions in the:

In audit sampling, an advance estimate of the deviation rate is necessary to plan the appropriate sample size.The relationship of estimated population deviation rate (EPDR)to sample size is:

What is the most important aspect of audit sampling?

When monetary-unit sampling is used to audit accounts receivable, a customer's account with a small year-end balance has the same chance of being included in the sample as a customer's account with a large year-end balance.

Which one of the following BEST illustrates the concept of sampling risk?

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