Question 1

The auditor using nonstatistical attributes sampling, but who nevertheless has chosen the sample in conformity with random selection procedures:

Accepted Answer

A)  Need not consider the risk of assessing control risk too low. 
B)  Has committed a nonsampling error. 
C)  Will have to use discovery sampling techniques to evaluate the results. 
D)  Should compare the deviation rate of the sample to the tolerable rate. 
A)  Need not consider the risk of assessing control risk too low. 
B)  Has committed a nonsampling error. 
C)  Will have to use discovery sampling techniques to evaluate the results. 
D)  Should compare the deviation rate of the sample to the tolerable rate. D

Question 2

Which of the following best illustrates the concept of sampling risk?

Accepted Answer

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

Question 3

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

Accepted Answer

A)  When the projected misstatement exceeds the tolerable misstatement, the auditor should conclude that the population is not misstated. 
B)  The closer the projected misstatement is to the tolerable misstatement, the higher the risk of material misstatement. 
C)  When the projected misstatement is equal to zero, the auditors may conclude with certainty that no misstatements exist in the account. 
D)  When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated. 
A)  When the projected misstatement exceeds the tolerable misstatement, the auditor should conclude that the population is not misstated. 
B)  The closer the projected misstatement is to the tolerable misstatement, the higher the risk of material misstatement. 
C)  When the projected misstatement is equal to zero, the auditors may conclude with certainty that no misstatements exist in the account. 
D)  When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated. B

Question 4

To determine sample size in an attribute sampling application, what must be specified?

Accepted Answer

A)  Population mean, expected error rate, allowance for sampling risk. 
B)  Allowance for sampling risk, risk of assessing control risk too low, standard deviation. 
C)  Allowance for sampling risk, risk of assessing control risk too low, expected deviation rate. 
D)  Population mean, standard deviation, allowance for sampling risk. 
A)  Population mean, expected error rate, allowance for sampling risk. 
B)  Allowance for sampling risk, risk of assessing control risk too low, standard deviation. 
C)  Allowance for sampling risk, risk of assessing control risk too low, expected deviation rate. 
D)  Population mean, standard deviation, allowance for sampling risk.

Question 5

When using statistical sampling, which of the following need not be known to evaluate the results of an attributes sample?

Accepted Answer

A)  Sample size. 
B)  Risk of assessing control risk too low. 
C)  Number of deviations in the population. 
D)  Number of deviations found in the sample. 
A)  Sample size. 
B)  Risk of assessing control risk too low. 
C)  Number of deviations in the population. 
D)  Number of deviations found in the sample.

Question 6

When performing a test of a control over cash disbursements, a CPA may use a systematic sampling technique with a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population:

Accepted Answer

A)  Must be recorded in a systematic pattern before the sample can be drawn. 
B)  May occur in a systematic pattern and destroy the sample randomness. 
C)  May systematically occur more than once in the sample. 
D)  Must be systematically replaced in the population after sampling. 
A)  Must be recorded in a systematic pattern before the sample can be drawn. 
B)  May occur in a systematic pattern and destroy the sample randomness. 
C)  May systematically occur more than once in the sample. 
D)  Must be systematically replaced in the population after sampling.

Question 7

If all other factors specified in an attributes sampling plan remain constant, decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

Accepted Answer

A)  Increase. 
B)  Remain the same. 
C)  Decrease. 
D)  Indeterminate, depends upon exact change being made. 
A)  Increase. 
B)  Remain the same. 
C)  Decrease. 
D)  Indeterminate, depends upon exact change being made.

Question 8

The 3,000 accounts receivable of DEF Company have a total book value of $60,000. Bob Smith, CPA, has selected and audited a sample of 100 accounts with a total book value of $2,100. Using the difference estimation technique, Smith has properly estimated a projected misstatement of an overstatement of $6,000 for the entire population. The audited value of Smith's sample is:

Accepted Answer

A)  $1,700 
B)  $1,800 
C)  $1,900 
D)  $2,300 
A)  $1,700 
B)  $1,800 
C)  $1,900 
D)  $2,300

Question 9

During the final planning of the accounts receivable plan a CPA specified a tolerable misstatement of $30,000, instead of the $20,000 contained in the preliminary audit plan. What would be the impact of this change?

Accepted Answer

A)  A decrease in population standard deviation. 
B)  An increase in sample standard deviation. 
C)  An increase in required sample size. 
D)  A decrease in the required sample size. 
A)  A decrease in population standard deviation. 
B)  An increase in sample standard deviation. 
C)  An increase in required sample size. 
D)  A decrease in the required sample size.

Question 10

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the:

Accepted Answer

A)  Sample mean. 
B)  Standard deviation. 
C)  Standard error of the sample mean. 
D)  Estimated population total minus the actual population total. 
A)  Sample mean. 
B)  Standard deviation. 
C)  Standard error of the sample mean. 
D)  Estimated population total minus the actual population total.

Question 11

If all other factors specified in an attributes sampling plan remain constant, changing the specified tolerable rate from 6% to 10%, and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to:

Accepted Answer

A)  Increase. 
B)  Remain the same. 
C)  Decrease. 
D)  Change by 4%. 
A)  Increase. 
B)  Remain the same. 
C)  Decrease. 
D)  Change by 4%.

Question 12

In variables estimation sampling, the sample standard deviation is used to calculate the:

Accepted Answer

A)  Point estimate of central tendency. 
B)  Tainting of the sample interval. 
C)  Risk of incorrect acceptance. 
D)  Adjusted allowance for sampling risk. 
A)  Point estimate of central tendency. 
B)  Tainting of the sample interval. 
C)  Risk of incorrect acceptance. 
D)  Adjusted allowance for sampling risk.

Question 13

Using the mean-per-unit estimation technique, Rotter's estimate (to the nearest dollar) of year-end accounts receivable balance would be:

Accepted Answer

A)  $37,500 
B)  $38,462 
C)  $38,500 
D)  $41,600 
A)  $37,500 
B)  $38,462 
C)  $38,500 
D)  $41,600

Question 14

The auditors expect a population deviation rate of billing errors of two percent, and have established a tolerable rate of five percent. The sampling approach most likely to be used is:

Accepted Answer

A)  Attributes sampling. 
B)  Stratified sequential sampling. 
C)  Discovery sampling. 
D)  None, as sampling does not seem appropriate in this situation. 
A)  Attributes sampling. 
B)  Stratified sequential sampling. 
C)  Discovery sampling. 
D)  None, as sampling does not seem appropriate in this situation.

Question 15

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Accepted Answer

A)  Depend primarily on appropriate segregation of duties. 
B)  Are carefully reduced to writing and are included in client accounting manuals. 
C)  Leave an audit trail in the form of evidence of compliance. 
D)  Enable the detection of material fraud in the accounting records. 
A)  Depend primarily on appropriate segregation of duties. 
B)  Are carefully reduced to writing and are included in client accounting manuals. 
C)  Leave an audit trail in the form of evidence of compliance. 
D)  Enable the detection of material fraud in the accounting records.

Question 16

Using the mean-per-unit estimation technique, the estimated total audited value of the population is:

Accepted Answer

A)  $100,000. 
B)  $120,000. 
C)  $140,000. 
D)  $144,000. 
A)  $100,000. 
B)  $120,000. 
C)  $140,000. 
D)  $144,000.

Question 17

What effect does obtaining a sample with a standard deviation larger than that estimated during planning have on the adjusted allowance for sampling risk?

Accepted Answer

A)  Increases. 
B)  Decreases. 
C)  No effect. 
D)  Indeterminate. 
A)  Increases. 
B)  Decreases. 
C)  No effect. 
D)  Indeterminate.

Question 18

Increases in the number of deviations in an attributes sample results in an increase in the achieved upper deviation rate of the attributes sample.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following types of risk is of critical importance to auditors in performing tests of controls?

Accepted Answer

A)  The risk of assessing control risk too low. 
B)  The risk of assessing control risk too high. 
C)  The risk of incorrect acceptance. 
D)  The risk of incorrect rejection. 
A)  The risk of assessing control risk too low. 
B)  The risk of assessing control risk too high. 
C)  The risk of incorrect acceptance. 
D)  The risk of incorrect rejection.

Question 20

Auditors have a variety of sampling approaches available. For each approach in the first column, identify the correct statement in the second column. Each statement may be used once, more than once, or not at all.

Accepted Answer

A. 8
B. 1

The auditor using nonstatistical attributes sampling, but who nevertheless has chosen the sample in conformity with random selection procedures:

Which of the following best illustrates the concept of sampling risk?

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

To determine sample size in an attribute sampling application, what must be specified?

When using statistical sampling, which of the following need not be known to evaluate the results of an attributes sample?

When performing a test of a control over cash disbursements, a CPA may use a systematic sampling technique with a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population:

If all other factors specified in an attributes sampling plan remain constant, decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

During the final planning of the accounts receivable plan a CPA specified a tolerable misstatement of $30,000, instead of the $20,000 contained in the preliminary audit plan. What would be the impact of this change?

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the:

If all other factors specified in an attributes sampling plan remain constant, changing the specified tolerable rate from 6% to 10%, and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to:

In variables estimation sampling, the sample standard deviation is used to calculate the:

Using the mean-per-unit estimation technique, Rotter's estimate (to the nearest dollar) of year-end accounts receivable balance would be:

The auditors expect a population deviation rate of billing errors of two percent, and have established a tolerable rate of five percent. The sampling approach most likely to be used is:

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Using the mean-per-unit estimation technique, the estimated total audited value of the population is:

What effect does obtaining a sample with a standard deviation larger than that estimated during planning have on the adjusted allowance for sampling risk?

Increases in the number of deviations in an attributes sample results in an increase in the achieved upper deviation rate of the attributes sample.

Which of the following types of risk is of critical importance to auditors in performing tests of controls?

Auditors have a variety of sampling approaches available. For each approach in the first column, identify the correct statement in the second column. Each statement may be used once, more than once, or not at all.

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Planning the Audit; Linking Audit Procedures to Risk

Internal Control

Consideration of Internal Control in an Information Technology Environment

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property, Plant, and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Filters

Exam 9: Audit Sampling

The auditor using nonstatistical attributes sampling, but who nevertheless has chosen the sample in conformity with random selection procedures:

Which of the following best illustrates the concept of sampling risk?

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

To determine sample size in an attribute sampling application, what must be specified?

When using statistical sampling, which of the following need not be known to evaluate the results of an attributes sample?

When performing a test of a control over cash disbursements, a CPA may use a systematic sampling technique with a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population:

If all other factors specified in an attributes sampling plan remain constant, decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

During the final planning of the accounts receivable plan a CPA specified a tolerable misstatement of $30,000, instead of the $20,000 contained in the preliminary audit plan. What would be the impact of this change?

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the:

If all other factors specified in an attributes sampling plan remain constant, changing the specified tolerable rate from 6% to 10%, and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to:

In variables estimation sampling, the sample standard deviation is used to calculate the:

Using the mean-per-unit estimation technique, Rotter's estimate (to the nearest dollar) of year-end accounts receivable balance would be:

The auditors expect a population deviation rate of billing errors of two percent, and have established a tolerable rate of five percent. The sampling approach most likely to be used is:

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Using the mean-per-unit estimation technique, the estimated total audited value of the population is:

What effect does obtaining a sample with a standard deviation larger than that estimated during planning have on the adjusted allowance for sampling risk?

Increases in the number of deviations in an attributes sample results in an increase in the achieved upper deviation rate of the attributes sample.

Which of the following types of risk is of critical importance to auditors in performing tests of controls?

Auditors have a variety of sampling approaches available. For each approach in the first column, identify the correct statement in the second column. Each statement may be used once, more than once, or not at all.

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Planning the Audit; Linking Audit Procedures to Risk

Internal Control

Consideration of Internal Control in an Information Technology Environment

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property, Plant, and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Filters