Exam 8: Audit Sampling: An Overview and Application to Tests of Controls

With a nonstatistical sampling application,the auditor relies on professional judgment rather than the laws of probability to reach a conclusion about the audit test.

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Question 1

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For a particular audit,the sample size for testing controls over the revenue cycle is relatively large.What can you infer about the desired confidence level,the tolerable deviation rate,and the expected population deviation rate?

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Question 2

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There is a direct relationship between the confidence level and sample size.Therefore,one can infer from a large sample size that the auditor would like a higher confidence level.On the other hand,the sample size is inversely related to the tolerable deviation rate.Therefore,the tolerable deviation rate must have been relatively low.The expected population deviation rate and sample size are directly related,so there must be a larger expected population deviation rate.

In which of the following cases would the auditor be most likely to conclude that all of the items in an account under consideration should be examined rather than tested on a sample basis?

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Question 3

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Define sampling risk and nonsampling risk.

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Question 4

Jones,CPA,believes the industry-wide deviation rate of client billing errors is 3% and has established a tolerable deviation rate of 5%.In the review of client invoices,Jones should use

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Question 5

For an attributes sampling plan,the tolerable deviation rate is 4%,the computed upper deviation rate is 7%,the sample deviation rate is 3%,and the risk of assessing control risk too low is 5%.Which of the following is true?

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Question 6

Which of the following statements is correct concerning statistical sampling in tests of controls?

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Question 7

As a result of tests of controls,an auditor over relied on internal control and decreased substantive testing.This overreliance occurred because the true deviation rate in the population was

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Question 8

A control is deemed to be more important than thought at the time that attributes sampling parameters were set.The auditor is most likely to respond by

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Question 9

In attributes sampling,population size has little or no effect on sample size once the population exceeds approximately

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Question 10

An underlying feature of random-based selection of items is that each

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Question 11

Auditors who prefer statistical sampling to nonstatistical sampling may do so because statistical sampling helps the auditor

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Question 12

Statistical sampling provides a technique for

(Multiple Choice)

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Question 13

Which of the following risks is related to effectiveness of testing?

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Question 14

Which of the following combinations guarantees a larger sample size?

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Question 15

In addition to evaluating the frequency of deviations in tests of controls,an auditor should also consider certain qualitative aspects of the deviations.The auditor most likely would give broader consideration to the implications of a deviation if it was

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Question 16

The risk of incorrect acceptance relates to the

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Question 17

Confidence level is the complement of sampling risk.

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Question 18

"Computer assisted audit techniques and big data analysis have steadily reduced the number of situations in which audit sampling is necessary and,in the future,will probably eliminate the need for auditors to rely on sampling." Defend or refute the preceding statement.

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Question 19

Audit sampling is commonly used for which type of audit evidence?

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Question 20

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Exam 8: Audit Sampling: An Overview and Application to Tests of Controls

With a nonstatistical sampling application,the auditor relies on professional judgment rather than the laws of probability to reach a conclusion about the audit test.

For a particular audit,the sample size for testing controls over the revenue cycle is relatively large.What can you infer about the desired confidence level,the tolerable deviation rate,and the expected population deviation rate?

In which of the following cases would the auditor be most likely to conclude that all of the items in an account under consideration should be examined rather than tested on a sample basis?

Define sampling risk and nonsampling risk.

Jones,CPA,believes the industry-wide deviation rate of client billing errors is 3% and has established a tolerable deviation rate of 5%.In the review of client invoices,Jones should use

For an attributes sampling plan,the tolerable deviation rate is 4%,the computed upper deviation rate is 7%,the sample deviation rate is 3%,and the risk of assessing control risk too low is 5%.Which of the following is true?

Which of the following statements is correct concerning statistical sampling in tests of controls?

As a result of tests of controls,an auditor over relied on internal control and decreased substantive testing.This overreliance occurred because the true deviation rate in the population was

A control is deemed to be more important than thought at the time that attributes sampling parameters were set.The auditor is most likely to respond by

In attributes sampling,population size has little or no effect on sample size once the population exceeds approximately

An underlying feature of random-based selection of items is that each

Auditors who prefer statistical sampling to nonstatistical sampling may do so because statistical sampling helps the auditor

Statistical sampling provides a technique for

Which of the following risks is related to effectiveness of testing?

Which of the following combinations guarantees a larger sample size?

In addition to evaluating the frequency of deviations in tests of controls,an auditor should also consider certain qualitative aspects of the deviations.The auditor most likely would give broader consideration to the implications of a deviation if it was

The risk of incorrect acceptance relates to the

Confidence level is the complement of sampling risk.

"Computer assisted audit techniques and big data analysis have steadily reduced the number of situations in which audit sampling is necessary and,in the future,will probably eliminate the need for auditors to rely on sampling." Defend or refute the preceding statement.

Audit sampling is commonly used for which type of audit evidence?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professsional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

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