Exam 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

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What is the key advantage and disadvantage associated with systematic sample selection? How must auditors address this disadvantage?

(Essay)

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Question 41

Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%.In auditing client invoices Rodgers should use:

(Multiple Choice)

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Question 42

One way to control sampling risk is to increase sample size.

(True/False)

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Question 43

Acceptable risk of overreliance is normally lower for a public company audit than a private company audit.

(True/False)

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Question 44

Which of the following is a correct statement regarding block sampling?

(Multiple Choice)

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Question 45

Auditors often use the ________ to determine the estimated population exception rate.

(Multiple Choice)

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Question 46

An auditor can increase the likelihood that a sample is representative by using care in:

(Multiple Choice)

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Question 47

When a population is divided into subpopulations,usually by dollar size,and larger samples are taken from the subpopulation with the larger sizes,________ is being used.

(Multiple Choice)

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Question 48

Which of the following must be set prior to testing a sample?

(Multiple Choice)

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Question 49

Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?

(Multiple Choice)

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Question 50

If an auditor judgmentally selects a sample of one hundred items from a population and finds two exceptions,the auditor:

(Multiple Choice)

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Question 51

One way to evaluate sampling risk when nonstatistical sampling is used is to:

(Multiple Choice)

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Question 52

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

(Multiple Choice)

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Question 53

Acceptable risk of overreliance is the risk that the auditor is willing to take in accepting a control as effective when the true population exception rate is greater than the estimated population exception rate.

(True/False)

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Question 54

Place the following steps in their proper order: 1)Analyze exceptions 2)Select the sample 3)Define attributes and exception conditions 4)State the objectives of the audit test 5)Specify the tolerable exception rate

(Multiple Choice)

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Question 55

The only way to know with certainty whether a sample is representative is to subsequently audit the entire population.

(True/False)

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Question 56

One of the causes of nonsampling risk is:

(Multiple Choice)

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Question 57

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

(True/False)

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Question 58

If an auditor does a test in the wrong direction,sampling risk will increase.

(True/False)

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Question 59

Auditors who prefer statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its ability to:

(Multiple Choice)

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Question 60

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Exam 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

What is the key advantage and disadvantage associated with systematic sample selection? How must auditors address this disadvantage?

Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%.In auditing client invoices Rodgers should use:

One way to control sampling risk is to increase sample size.

Acceptable risk of overreliance is normally lower for a public company audit than a private company audit.

Which of the following is a correct statement regarding block sampling?

Auditors often use the ________ to determine the estimated population exception rate.

An auditor can increase the likelihood that a sample is representative by using care in:

When a population is divided into subpopulations,usually by dollar size,and larger samples are taken from the subpopulation with the larger sizes,________ is being used.

Which of the following must be set prior to testing a sample?

Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?

If an auditor judgmentally selects a sample of one hundred items from a population and finds two exceptions,the auditor:

One way to evaluate sampling risk when nonstatistical sampling is used is to:

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

Acceptable risk of overreliance is the risk that the auditor is willing to take in accepting a control as effective when the true population exception rate is greater than the estimated population exception rate.

Place the following steps in their proper order: 1)Analyze exceptions 2)Select the sample 3)Define attributes and exception conditions 4)State the objectives of the audit test 5)Specify the tolerable exception rate

The only way to know with certainty whether a sample is representative is to subsequently audit the entire population.

One of the causes of nonsampling risk is:

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

If an auditor does a test in the wrong direction,sampling risk will increase.

Auditors who prefer statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its ability to:

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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