Question 1

The upper limit rate of deviation equals the _____________________________ plus the allowance for sampling risk.

Accepted Answer

The answer of The upper limit rate of deviation equals...

Question 2

The ultimate purpose of control risk assessment is to:

Accepted Answer

A)  Estimate the overall risk of failing to detect material misstatements. 
B)  Decide the nature, timing, and extent of substantive procedures. 
C)  Determine the risk of incorrect acceptance. 
D)  Determine the probability that errors entered the accounts.

Question 3

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the

Accepted Answer

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

Question 4

Which of the following would not result in the audit team's selecting a larger sample of controls for examination?

Accepted Answer

A)  A reduction in the risk of overreliance from 10 percent to 5 percent. 
B)  An increase in the tolerable rate of deviation from 3 percent to 6 percent. 
C)  An increase in the expected population deviation rate from 2 percent to 4 percent. 
D)  All of the above would result in a larger sample of controls.

Question 5

In performing attributes sampling,the auditor will conclude that the control is functioning as intended if the _____________ is less than or equal to ____________.

Accepted Answer

A)  expected population deviation rate, tolerable rate of deviation. 
B)  upper limit rate of deviation, tolerable rate of deviation. 
C)  tolerable rate of deviation, expected population deviation rate. 
D)  tolerable rate of deviation, upper limit rate of deviation.

Question 6

An auditor wants to perform a test of controls for a sensitive control.If she discovers even one deviation,she will reject the control as unacceptable.She is especially concerned about finding a deviation rate of more than 1 percent.Using discovery sampling and the sample evaluation table for 5 percent risk of overreliance,what sample size should she use?

Accepted Answer

A)  20. 
B)  150. 
C)  300. 
D)  500.

Question 7

The _______________________________ is the frame of reference used by the auditor to represent the population when selecting the sample.

Accepted Answer

The answer of The _______________________________ is the frame of reference...

Question 8

The risk of _______________________ is the likelihood that the auditor's sample indicates that important controls are functioning effectively when,in fact,the true (but unknown)population deviation rate exceeds the tolerable rate of deviation.

Accepted Answer

The answer of The risk of _______________________ is the likelihood...

Question 9

If the sample evidence does not support the planned level of control risk,the audit team could

Accepted Answer

A)  Increase the assessed level of control risk. 
B)  Perform additional substantive procedures, reducing the necessary level of detection risk. 
C)  Expand the sample to achieve an observed upper limit rate of deviation less than the tolerable rate of deviation. 
D)  All of the above are correct responses.

Question 10

The auditor determines the tolerable rate of deviation based on the anticipated _____________________ on the client's internal control.

Accepted Answer

The answer of The auditor determines the tolerable rate of...

Question 11

After examining sample items and classifying items as deviations,the auditor can divide the number of deviations by the sample size and calculate the

Accepted Answer

A)  Expected population deviation rate. 
B)  Risk of underreliance. 
C)  Sample rate of deviation. 
D)  Tolerable rate of deviation.

Question 12

The auditor tested a sample of recorded sales invoices for evidence of credit approval.Based on the results of the sample,the auditor concluded that there was a satisfactory rate of approvals.Unknown to the auditor,credit approvals in the population were not satisfactory.This would be an example of the risk of

Accepted Answer

A)  Overreliance. 
B)  Underreliance. 
C)  Incorrect acceptance. 
D)  Incorrect rejection.

Question 13

As a result of sampling procedures applied as tests of controls,an auditor incorrectly assesses control risk lower than appropriate.The most likely explanation for this situation is that

Accepted Answer

A)  The deviation rates of both the auditor's sample and the population exceed the tolerable rate of deviation. 
B)  The deviation rates of both the auditor's sample and the population are less than the tolerable rate of deviation. 
C)  The deviation rate in the auditor's sample is less than the tolerable rate of deviation, but the deviation rate in the population exceeds the tolerable rate of deviation. 
D)  The deviation rate in the auditor's sample exceeds the tolerable rate of deviation, but the deviation rate in the population is less than the tolerable rate of deviation.

Question 14

Sequential sampling is sometimes referred to as a(n)_________________________ sampling plan.

Accepted Answer

The answer of Sequential sampling is sometimes referred to as...

Question 15

Of the two sampling risks associated with attributes sampling,auditors are more concerned with the risk of underreliance.

Accepted Answer

A) True 
 B)False

Question 16

Rome,CPA,is examining the internal control of Smack,Inc.Rome has established a risk of overreliance of 10%,an expected population deviation rate of 1%,and a tolerable rate of deviation of 5%. Ignore your answer to question 85.Assume that a sample of 100 items was examined and 5 deviations were noted.What is the upper limit rate of deviation?

Accepted Answer

A)  5.0 percent. 
B)  9.1 percent. 
C)  10.0 percent. 
D)  10.3 percent.

Question 17

In addition to the quantitative measure of deviations,the auditor should also consider qualitative measures,such as the pervasiveness and source of the deviations.

Accepted Answer

A) True 
 B)False

Question 18

The procedures for statistical evaluation of tests of controls with the AICPA evaluation tables would not include which of the following steps?

Accepted Answer

A)  Identify the population deviation rate. 
B)  Identify the sample size in the left margin. 
C)  Identify the number of actual deviations for the sample size. 
D)  Identify the upper limit rate of deviation given the sample size and number of deviations.

Question 19

When verifying the completeness assertion for sales transactions,the auditor would define the population as a shipping document for purposes of performing tests of controls.

Accepted Answer

A) True 
 B)False

Question 20

An auditor is testing control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers.If a random number matches the number of a voided voucher,that voucher ordinarily should be replaced by another voucher in the random sample if the voucher

Accepted Answer

A)  Constitutes a deviation. 
B)  Has been properly voided. 
C)  Cannot be located. 
D)  Represents an immaterial dollar amount.

Exam 18: Attributes Sampling

The upper limit rate of deviation equals the _____________________________ plus the allowance for sampling risk.

The ultimate purpose of control risk assessment is to:

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the

Which of the following would not result in the audit team's selecting a larger sample of controls for examination?

In performing attributes sampling,the auditor will conclude that the control is functioning as intended if the _ is less than or equal to .

The _______________________________ is the frame of reference used by the auditor to represent the population when selecting the sample.

The risk of _______________________ is the likelihood that the auditor's sample indicates that important controls are functioning effectively when,in fact,the true (but unknown)population deviation rate exceeds the tolerable rate of deviation.

If the sample evidence does not support the planned level of control risk,the audit team could

The auditor determines the tolerable rate of deviation based on the anticipated _____________________ on the client's internal control.

After examining sample items and classifying items as deviations,the auditor can divide the number of deviations by the sample size and calculate the

As a result of sampling procedures applied as tests of controls,an auditor incorrectly assesses control risk lower than appropriate.The most likely explanation for this situation is that

Sequential sampling is sometimes referred to as a(n)_________________________ sampling plan.

Of the two sampling risks associated with attributes sampling,auditors are more concerned with the risk of underreliance.

In addition to the quantitative measure of deviations,the auditor should also consider qualitative measures,such as the pervasiveness and source of the deviations.

The procedures for statistical evaluation of tests of controls with the AICPA evaluation tables would not include which of the following steps?

When verifying the completeness assertion for sales transactions,the auditor would define the population as a shipping document for purposes of performing tests of controls.

An auditor is testing control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers.If a random number matches the number of a voided voucher,that voucher ordinarily should be replaced by another voucher in the random sample if the voucher