Question 1

Based on the information in Question 69,the allowance for sampling risk was

Accepted Answer

A)  2.2%. 
B)  5.0%. 
C)  7.8%. 
D)  10.0%. 
A)  2.2%. 
B)  5.0%. 
C)  7.8%. 
D)  10.0%.

Question 2

Indicate how each of the following conditions affects sample size from the AICPA sample tables by using the letters I (increase),D (decrease),or N (no effect),holding all other factors constant.
_____ 1.An increase in the expected population deviation rate from 2 percent to 5 percent
_____ 2.A decrease in the population from 10,000 controls to 5,000 controls
_____ 3.An increase in the tolerable rate of deviation from 3 percent to 10 percent
_____ 4.An increase in the risk of underreliance from 5 percent to 10 percent
_____ 5.A decrease in the risk of overreliance from 5 percent to 1 percent

Accepted Answer

1.I; 2.N;

Question 3

For which of the following audit tests would an auditor most likely use attributes sampling?

Accepted Answer

A)  Making an independent estimate of the amount of a LIFO inventory. 
B)  Examining invoices in support of the valuation of fixed asset additions. 
C)  Selecting accounts receivable for confirmation of account balances. 
D)  Inspecting employee time cards for proper approval by supervisors. 
A)  Making an independent estimate of the amount of a LIFO inventory. 
B)  Examining invoices in support of the valuation of fixed asset additions. 
C)  Selecting accounts receivable for confirmation of account balances. 
D)  Inspecting employee time cards for proper approval by supervisors.

Question 4

Which of the following components of the audit risk model is most closely associated with attributes sampling?

Accepted Answer

A)  Audit risk. 
B)  Control risk. 
C)  Detection risk. 
D)  Inherent risk. 
A)  Audit risk. 
B)  Control risk. 
C)  Detection risk. 
D)  Inherent risk.

Question 5

The upper limit rate of deviation is equal to the sample rate of deviation minus the allowance for sampling risk.

Accepted Answer

A) True 
 B)False

Question 6

The risk of overreliance results in a(n)______________________ loss to the auditor.

Accepted Answer

The answer of The risk of overreliance results in a(n)______________________...

Question 7

In determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized,an auditor should consider the tolerable rate of deviation from the control activity.The auditor should also consider: (1)Likely rate of deviations
(2)Allowable risk of underreliance.

Accepted Answer

A)  (1) only. 
B)  (2) only. 
C)  Both (1) and (2). 
D)  Either (1) or (2). 
A)  (1) only. 
B)  (2) only. 
C)  Both (1) and (2). 
D)  Either (1) or (2).

Question 8

In which step of a sampling plan is nonstatistical sampling different than statistical sampling?

Accepted Answer

A)  Define the characteristic of interest. 
B)  Define the population. 
C)  Measure the sample items. 
D)  Evaluate the sample results. 
A)  Define the characteristic of interest. 
B)  Define the population. 
C)  Measure the sample items. 
D)  Evaluate the sample results.

Question 9

An auditor is examining an important internal control in his audit of ABC Company.Because the account balance affected by this control is highly susceptible to fraud,he will reject the sample if even one deviation is discovered.What type of sampling plan should he use?

Accepted Answer

A)  Attributes sampling. 
B)  Discovery sampling. 
C)  Sequential sampling. 
D)  Statistical sampling. 
A)  Attributes sampling. 
B)  Discovery sampling. 
C)  Sequential sampling. 
D)  Statistical sampling.

Question 10

Using AICPA sample evaluation tables,what is the conclusion from a statistical sample of internal controls when a sample of 125 documents indicates five deviations if the tolerable rate of deviation is 5 percent,the expected population deviation rate is 2 percent,and the allowance for sampling risk is 3 percent?

Accepted Answer

A)  Accept the evidence as support for assessing a low control risk because the tolerable rate of deviation less the allowance for sampling risk is less than the expected population deviation rate. 
B)  Use the evidence to assess a higher control risk than planned because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation. 
C)  Use the evidence to assess a higher control risk than planned because tolerable rate of deviation plus the allowance for sampling risk exceeds the expected population deviation rate. 
D)  Accept the evidence as support for assessing a low control risk because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation. 
A)  Accept the evidence as support for assessing a low control risk because the tolerable rate of deviation less the allowance for sampling risk is less than the expected population deviation rate. 
B)  Use the evidence to assess a higher control risk than planned because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation. 
C)  Use the evidence to assess a higher control risk than planned because tolerable rate of deviation plus the allowance for sampling risk exceeds the expected population deviation rate. 
D)  Accept the evidence as support for assessing a low control risk because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation.

Question 11

The interpretation of the upper limit rate of deviation in an attributes sampling application is

Accepted Answer

A)  The estimated rate of deviation in the population with probability equal to the risk of overreliance that the population deviation rate is higher. 
B)  The estimated rate of deviation in the population with probability equal to the risk of overreliance that the actual rate of deviation is lower. 
C)  The estimated rate of deviation in the population with certainty that the actual rate of deviation is lower. 
D)  The estimated rate of deviation in the population with certainty that the actual rate of deviation is higher. 
A)  The estimated rate of deviation in the population with probability equal to the risk of overreliance that the population deviation rate is higher. 
B)  The estimated rate of deviation in the population with probability equal to the risk of overreliance that the actual rate of deviation is lower. 
C)  The estimated rate of deviation in the population with certainty that the actual rate of deviation is lower. 
D)  The estimated rate of deviation in the population with certainty that the actual rate of deviation is higher.

Question 12

Indicate how each of the following conditions affects the upper limit rate of deviation by using the letters I (increase),D (decrease),or N (no effect),holding all other factors constant.
_____ 1.An increase in the tolerable rate of deviation from 2 percent to 5 percent.
_____ 2.A decrease in the number of deviations from five to one.
_____ 3.An increase in the risk of underreliance from 5 percent to 10 percent.
_____ 4.A decrease in the risk of overreliance from 5 percent to 1 percent.
_____ 5.An increase in the sample rate of deviation from 2.3 percent to 3.5 percent.

Accepted Answer

1.N; 2.D;

Question 13

An auditor who concludes that a control is functioning properly when,in fact,it is not has committed the

Accepted Answer

A)  Risk of underreliance. 
B)  Risk of overreliance. 
C)  Risk of incorrect acceptance. 
D)  Risk of incorrect rejection. 
A)  Risk of underreliance. 
B)  Risk of overreliance. 
C)  Risk of incorrect acceptance. 
D)  Risk of incorrect rejection.

Question 14

In discovery sampling,the desired probability of one occurrence is defined as

Accepted Answer

A)  1 minus the risk of underreliance. 
B)  1 minus the risk of overreliance. 
C)  The critical rate of occurrence. 
D)  The population deviation rate. 
A)  1 minus the risk of underreliance. 
B)  1 minus the risk of overreliance. 
C)  The critical rate of occurrence. 
D)  The population deviation rate.

Question 15

Discovery sampling is ordinarily used when deviations from control procedures occur at a relatively low rate and are extremely important in the audit examination.

Accepted Answer

A) True 
 B)False

Question 16

The auditor's sample results must yield higher upper limit rate of deviation in order to support lower levels of control risk.

Accepted Answer

A) True 
 B)False

Question 17

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

Accepted Answer

A)  Increase inherent risk. 
B)  Increase overall materiality levels. 
C)  Decrease substantive procedures. 
D)  Decrease detection risk. 
A)  Increase inherent risk. 
B)  Increase overall materiality levels. 
C)  Decrease substantive procedures. 
D)  Decrease detection risk.

Based on the information in Question 69,the allowance for sampling risk was

For which of the following audit tests would an auditor most likely use attributes sampling?

Which of the following components of the audit risk model is most closely associated with attributes sampling?

The upper limit rate of deviation is equal to the sample rate of deviation minus the allowance for sampling risk.

The risk of overreliance results in a(n)______________________ loss to the auditor.

In which step of a sampling plan is nonstatistical sampling different than statistical sampling?

An auditor is examining an important internal control in his audit of ABC Company.Because the account balance affected by this control is highly susceptible to fraud,he will reject the sample if even one deviation is discovered.What type of sampling plan should he use?

The interpretation of the upper limit rate of deviation in an attributes sampling application is

An auditor who concludes that a control is functioning properly when,in fact,it is not has committed the

In discovery sampling,the desired probability of one occurrence is defined as

Discovery sampling is ordinarily used when deviations from control procedures occur at a relatively low rate and are extremely important in the audit examination.

The auditor's sample results must yield higher upper limit rate of deviation in order to support lower levels of control risk.

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Variables Sampling

Auditing in a Computerized Environment

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Exam 18: Attributes Sampling

Based on the information in Question 69,the allowance for sampling risk was

For which of the following audit tests would an auditor most likely use attributes sampling?

Which of the following components of the audit risk model is most closely associated with attributes sampling?

The upper limit rate of deviation is equal to the sample rate of deviation minus the allowance for sampling risk.

The risk of overreliance results in a(n)______________________ loss to the auditor.

In which step of a sampling plan is nonstatistical sampling different than statistical sampling?

An auditor is examining an important internal control in his audit of ABC Company.Because the account balance affected by this control is highly susceptible to fraud,he will reject the sample if even one deviation is discovered.What type of sampling plan should he use?

The interpretation of the upper limit rate of deviation in an attributes sampling application is

An auditor who concludes that a control is functioning properly when,in fact,it is not has committed the

In discovery sampling,the desired probability of one occurrence is defined as

Discovery sampling is ordinarily used when deviations from control procedures occur at a relatively low rate and are extremely important in the audit examination.

The auditor's sample results must yield higher upper limit rate of deviation in order to support lower levels of control risk.

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters