Question 1

Sampling risk (sampling error) is an inherent part of sampling that results from

Accepted Answer

A)  inappropriate audit procedures. 
B)  failure to recognize exceptions. 
C)  testing less than the entire population. 
D)  weaknesses in the client's internal control system. 
A)  inappropriate audit procedures. 
B)  failure to recognize exceptions. 
C)  testing less than the entire population. 
D)  weaknesses in the client's internal control system.

Question 2

One of the purposes of using statistical sampling is to quantify sampling risk. For which of the following audit tests would sampling risk be zero?

Accepted Answer

A)  The auditor used monetary unit sampling to select a sample of payroll payments. 
B)  The auditor used attribute sampling to select a sample of shipping documents. 
C)  The auditor sent empty (zero balance) external confirmations to suppliers with large dollar balances. 
D)  The auditor sent external confirmations to all financial institutions used by the client. 
A)  The auditor used monetary unit sampling to select a sample of payroll payments. 
B)  The auditor used attribute sampling to select a sample of shipping documents. 
C)  The auditor sent empty (zero balance) external confirmations to suppliers with large dollar balances. 
D)  The auditor sent external confirmations to all financial institutions used by the client.

Question 3

Carrie found an error in the sample she tested from the population of accounts receivable that was over 90 days old. The error found by Carrie should be extrapolated to the population of

Accepted Answer

A)  all past-due accounts receivable. 
B)  accounts receivable over 90 days. 
C)  all accounts receivable. 
D)  current accounts receivable. 
A)  all past-due accounts receivable. 
B)  accounts receivable over 90 days. 
C)  all accounts receivable. 
D)  current accounts receivable.

Question 4

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

Accepted Answer

A)  determine the acceptability of the population. 
B)  determine sampling error and calculate the estimated total population error. 
C)  analyze exceptions or misstatements. 
D)  determine the error in each sample. 
A)  determine the acceptability of the population. 
B)  determine sampling error and calculate the estimated total population error. 
C)  analyze exceptions or misstatements. 
D)  determine the error in each sample.

Question 5

As part of the audit of sales, the auditor has used attribute sampling to select a sample of sales invoices. The auditor has examined the duplicate sales invoice to determine whether it was approved for credit. Which of the following would be termed the "attribute?" The

Accepted Answer

A)  sales invoice number. 
B)  approval initials. 
C)  name of the person who approves credit. 
D)  absence of an authorization. 
A)  sales invoice number. 
B)  approval initials. 
C)  name of the person who approves credit. 
D)  absence of an authorization.

Question 6

A) Describe the differences between statistical and nonstatistical sampling in terms of 1) the sample selection methods used, and 2) measurement (quantification) of sampling risk.
B) Describe each of the three types of sample selection methods commonly associated with nonstatistical audit sampling.
C) Directed sample selection is the selection of each item in the sample based on some judgment criteria established by the auditor. Describe three commonly used criteria.

Accepted Answer

A)Nonstatistical sampling differs from s

Question 7

Assume that the client's internal controls require a clerk to attach a shipping document to every duplicate sales invoice but this procedure is not followed exactly 3 percent of the time. If the auditor selects a sample of 200 duplicate sales invoices, which of the following sample results is most representative of the population?

Accepted Answer

A)  three shipping documents are missing 
B)  six shipping documents are missing 
C)  five shipping document are missing 
D)  there were no shipping documents missing 
A)  three shipping documents are missing 
B)  six shipping documents are missing 
C)  five shipping document are missing 
D)  there were no shipping documents missing

Question 8

The auditor has decided to audit all accounts receivable amounts that are over 120 days old and over $5000. What type of sample selection method is the auditor using?

Accepted Answer

A)  haphazard 
B)  systematic 
C)  directed 
D)  block 
A)  haphazard 
B)  systematic 
C)  directed 
D)  block

Question 9

One of the causes of nonsampling error is

Accepted Answer

A)  the use of inappropriate or ineffective audit procedures. 
B)  failure to draw a random sample. 
C)  failure to draw a representative sample. 
D)  the use of attribute sampling instead of variables sampling. 
A)  the use of inappropriate or ineffective audit procedures. 
B)  failure to draw a random sample. 
C)  failure to draw a representative sample. 
D)  the use of attribute sampling instead of variables sampling.

Question 10

An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the

Accepted Answer

A)  sample rate of exceptions is less than the expected rate of exception used in planning the sample. 
B)  tolerable exception rate less the allowance for sampling risk exceeds the sample rate of deviation. 
C)  sample rate of exceptions plus the allowance for sampling risk exceeds the tolerable exception rate. 
D)  sample rate of exceptions plus the allowance for sampling risk equals the tolerable exception rate. 
A)  sample rate of exceptions is less than the expected rate of exception used in planning the sample. 
B)  tolerable exception rate less the allowance for sampling risk exceeds the sample rate of deviation. 
C)  sample rate of exceptions plus the allowance for sampling risk exceeds the tolerable exception rate. 
D)  sample rate of exceptions plus the allowance for sampling risk equals the tolerable exception rate.

Question 11

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

Accepted Answer

A)  probabilistic selection. 
B)  judgmental selection. 
C)  haphazard selection. 
D)  block selection. 
A)  probabilistic selection. 
B)  judgmental selection. 
C)  haphazard selection. 
D)  block selection.

Question 12

CAS 530 has a very specific definition of sampling. Assuming that each item (described as a sampling unit) in the populations below could be selected as part of the sample, which of the following illustrates the other part of the CAS 530 definition of sampling?

Accepted Answer

A)  looking at 50 sales invoices from the current population of 100 000 
B)  recalculating interest calculations for notes payable 
C)  estimating the gross profit by product for all company products 
D)  inspecting all legal invoices for potential contingent liabilities 
A)  looking at 50 sales invoices from the current population of 100 000 
B)  recalculating interest calculations for notes payable 
C)  estimating the gross profit by product for all company products 
D)  inspecting all legal invoices for potential contingent liabilities

Question 13

As part of the audit of sales, the auditor has used attribute sampling to select a sample of sales invoices. The auditor has examined the duplicate sales invoice to determine whether it was approved for credit. The client has a December year end. In October, the auditor conducted the interim audit and drew a sample of 40 items that covered the period from January to September. In order to be able to generalize to the sales population, the auditor should also

Accepted Answer

A)  select sample items from the rest of the year. 
B)  increase the sample size in proportion to the total population size. 
C)  use statistical methods to calculate sampling risk. 
D)  use statistical methods to calculate non-sampling risk. 
A)  select sample items from the rest of the year. 
B)  increase the sample size in proportion to the total population size. 
C)  use statistical methods to calculate sampling risk. 
D)  use statistical methods to calculate non-sampling risk.

Question 14

In statistical terms, acceptable risk of assessing control risk too low (ARACR) corresponds with

Accepted Answer

A)  sampling risk. 
B)  inherent risk. 
C)  control risk. 
D)  nonsampling risk. 
A)  sampling risk. 
B)  inherent risk. 
C)  control risk. 
D)  nonsampling risk.

Question 15

You are working on the testing of internal controls over price changes in the inventory system. You completed the controls testing to determine whether all price changes were approved by the senior accountant, by reference to master file change forms. In order to place reliance on this control, your audit supervisor has decided that the error rate in the population should be less than 1%. When you calculated your sample size, you used a confidence level of 90% and predicted an error rate of less than one percent. Based on these decisions, you examined 150 inventory price master file change forms. In your testing you uncovered two deviations. Based on these results, you calculate that the actual error rate in the population could be as high as 2.33%.
Required:
Required:
A) What actions are available to you regarding your planned reliance on the master file change controls?
B) What are the advantages and disadvantages of each action?
C) How would you decide which action to take?

Accepted Answer

The problem here is that the actual erro

Question 16

A) Discuss what is meant by "sampling risk."
B) Discuss what is meant by "nonsampling risk."
C) Discuss two causes of nonsampling risk. Also discuss ways the auditor can control nonsampling risk.
D) Discuss two ways the auditor can control sampling risk.

Accepted Answer

A)Sampling risk occurs when the sample i

Question 17

The auditor wants to trace credits from the accounts receivable transaction history files to the duplicate bank deposit slips and other authorized sources as a test for fictitious credits in the data files. Which of the following sampling methods would be the least costly to use in this situation?

Accepted Answer

A)  simple random 
B)  block 
C)  systematic 
D)  probability proportionate-to-size 
A)  simple random 
B)  block 
C)  systematic 
D)  probability proportionate-to-size

Question 18

The process that requires the calculation of an interval and then selects the items based on the size of the interval is

Accepted Answer

A)  statistical sampling. 
B)  random selection. 
C)  systematic selection. 
D)  computerized selection. 
A)  statistical sampling. 
B)  random selection. 
C)  systematic selection. 
D)  computerized selection.

Question 19

A statistical method used to estimate the proportion of items in a population containing a characteristic of interest is

Accepted Answer

A)  population-proportional-to-size sampling. 
B)  attribute sampling. 
C)  variables sampling. 
D)  estimation sampling. 
A)  population-proportional-to-size sampling. 
B)  attribute sampling. 
C)  variables sampling. 
D)  estimation sampling.

Question 20

An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods

Accepted Answer

A)  afford greater assurance and clarity than a nonstatistical sample of equal size. 
B)  provide an objective basis for quantitatively evaluating sample risks. 
C)  can more easily convert the sample into a dual-purpose test useful for substantive testing. 
D)  eliminate the need to use judgment in determining appropriate sample sizes. 
A)  afford greater assurance and clarity than a nonstatistical sample of equal size. 
B)  provide an objective basis for quantitatively evaluating sample risks. 
C)  can more easily convert the sample into a dual-purpose test useful for substantive testing. 
D)  eliminate the need to use judgment in determining appropriate sample sizes.

Sampling risk (sampling error) is an inherent part of sampling that results from

One of the purposes of using statistical sampling is to quantify sampling risk. For which of the following audit tests would sampling risk be zero?

Carrie found an error in the sample she tested from the population of accounts receivable that was over 90 days old. The error found by Carrie should be extrapolated to the population of

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

As part of the audit of sales, the auditor has used attribute sampling to select a sample of sales invoices. The auditor has examined the duplicate sales invoice to determine whether it was approved for credit. Which of the following would be termed the "attribute?" The

The auditor has decided to audit all accounts receivable amounts that are over 120 days old and over $5000. What type of sample selection method is the auditor using?

One of the causes of nonsampling error is

An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the

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

CAS 530 has a very specific definition of sampling. Assuming that each item (described as a sampling unit) in the populations below could be selected as part of the sample, which of the following illustrates the other part of the CAS 530 definition of sampling?

In statistical terms, acceptable risk of assessing control risk too low (ARACR) corresponds with

A) Discuss what is meant by "sampling risk." B) Discuss what is meant by "nonsampling risk." C) Discuss two causes of nonsampling risk. Also discuss ways the auditor can control nonsampling risk. D) Discuss two ways the auditor can control sampling risk.

The auditor wants to trace credits from the accounts receivable transaction history files to the duplicate bank deposit slips and other authorized sources as a test for fictitious credits in the data files. Which of the following sampling methods would be the least costly to use in this situation?

The process that requires the calculation of an interval and then selects the items based on the size of the interval is

A statistical method used to estimate the proportion of items in a population containing a characteristic of interest is

An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 11: Audit Sampling Concepts

Sampling risk (sampling error) is an inherent part of sampling that results from

One of the purposes of using statistical sampling is to quantify sampling risk. For which of the following audit tests would sampling risk be zero?

Carrie found an error in the sample she tested from the population of accounts receivable that was over 90 days old. The error found by Carrie should be extrapolated to the population of

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

As part of the audit of sales, the auditor has used attribute sampling to select a sample of sales invoices. The auditor has examined the duplicate sales invoice to determine whether it was approved for credit. Which of the following would be termed the "attribute?" The

The auditor has decided to audit all accounts receivable amounts that are over 120 days old and over $5000. What type of sample selection method is the auditor using?

One of the causes of nonsampling error is

An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the

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

CAS 530 has a very specific definition of sampling. Assuming that each item (described as a sampling unit) in the populations below could be selected as part of the sample, which of the following illustrates the other part of the CAS 530 definition of sampling?

In statistical terms, acceptable risk of assessing control risk too low (ARACR) corresponds with

A) Discuss what is meant by "sampling risk." B) Discuss what is meant by "nonsampling risk." C) Discuss two causes of nonsampling risk. Also discuss ways the auditor can control nonsampling risk. D) Discuss two ways the auditor can control sampling risk.

The auditor wants to trace credits from the accounts receivable transaction history files to the duplicate bank deposit slips and other authorized sources as a test for fictitious credits in the data files. Which of the following sampling methods would be the least costly to use in this situation?

The process that requires the calculation of an interval and then selects the items based on the size of the interval is

A statistical method used to estimate the proportion of items in a population containing a characteristic of interest is

An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters