Question 1

In the evaluation of an MPU sampling plan where misstatements have been found, the auditor will not calculate:

Accepted Answer

A)  the estimated population value. 
B)  the tainting percentage. 
C)  achieved allowance for sampling risk. 
D)  precision. 
E)  adjusted achieved allowance for sampling risk. 
A)  the estimated population value. 
B)  the tainting percentage. 
C)  achieved allowance for sampling risk. 
D)  precision. 
E)  adjusted achieved allowance for sampling risk. B

Question 2

The greatest impact on audit efficiency comes from the risk(s) of:

Accepted Answer

A)  assessing control risk too high or too low. 
B)  assessing control risk too low and incorrect acceptance. 
C)  incorrect acceptance and incorrect rejection. 
D)  assessing control risk too high and incorrect acceptance. 
E)  assessing control risk too high and incorrect rejection. 
A)  assessing control risk too high or too low. 
B)  assessing control risk too low and incorrect acceptance. 
C)  incorrect acceptance and incorrect rejection. 
D)  assessing control risk too high and incorrect acceptance. 
E)  assessing control risk too high and incorrect rejection. E

Question 3

How does the auditor determine allowance for sampling risk in nonstatistical sampling?

Accepted Answer

In nonstatistical sampling, the auditor cannot calculate an allowance for sampling risk for specific, measurable levels of risk of incorrect acceptance and rejection. However, the difference between projected and tolerable misstatement may be perceived as an allowance for sampling risk. If tolerable misstatement is greater than projected misstatement by a large amount, the auditor may be reasonably assured that there is an acceptably low sampling risk and that the actual misstatement is greater than the tolerable misstatement.

Question 4

Tolerable misstatement is the minimum misstatement that can exist in an account before it is considered materially misstated.

Accepted Answer

A) True 
 B)False

Question 5

When using classical variables sampling, zero balances and different sign balances require special design consideration.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is most likely to be given as an advantage of classical variables sampling over PPS sampling?

Accepted Answer

A)  easier to use 
B)  more efficient in almost all cases 
C)  an estimate of the standard deviation is not necessary in determining sample size 
D)  less complex 
E)  easier to expand the sample when necessary 
A)  easier to use 
B)  more efficient in almost all cases 
C)  an estimate of the standard deviation is not necessary in determining sample size 
D)  less complex 
E)  easier to expand the sample when necessary

Question 7

In specifying an acceptable level of risk of incorrect acceptance, the auditor should consider the:

Accepted Answer

A)  assessed level of detection risk. 
B)  assessed level of control risk. 
C)  acceptable level of inherent risk. 
D)  results of tests of controls. 
E)  acceptable level of rejection risk. 
A)  assessed level of detection risk. 
B)  assessed level of control risk. 
C)  acceptable level of inherent risk. 
D)  results of tests of controls. 
E)  acceptable level of rejection risk.

Question 8

In PPS sampling plans, sample size is usually determined using tables.

Accepted Answer

A) True 
 B)False

Question 9

When no misstatements are found in a PPS sampling plan:

Accepted Answer

A)  allowance for sampling risk must be adjusted upward to compensate. 
B)  projected misstatement in the population is zero. 
C)  sampling must continue until at least one deviation is found. 
D)  the auditor should use a lower risk of incorrect acceptance in evaluating the sample than used in determining sample size. 
E)  the expansion factor can always be ignored. 
A)  allowance for sampling risk must be adjusted upward to compensate. 
B)  projected misstatement in the population is zero. 
C)  sampling must continue until at least one deviation is found. 
D)  the auditor should use a lower risk of incorrect acceptance in evaluating the sample than used in determining sample size. 
E)  the expansion factor can always be ignored.

Question 10

In the PPS sample size formula, which of the following is in the numerator?

Accepted Answer

A)  reliability factor (RF) 
B)  expansion factor (EF) 
C)  tolerable misstatement (TM) 
D)  anticipated misstatement (AM) 
E)  estimated misstatement (EM) 
A)  reliability factor (RF) 
B)  expansion factor (EF) 
C)  tolerable misstatement (TM) 
D)  anticipated misstatement (AM) 
E)  estimated misstatement (EM)

Question 11

In an MPU sampling plan, there is an inverse relationship between sample size and:

Accepted Answer

A)  population variation. 
B)  planned allowance for sampling risk. 
C)  risk of incorrect rejection. 
D)  population size and planned allowance for sampling risk. 
E)  planned allowance for sampling risk and risk of incorrect rejection. 
A)  population variation. 
B)  planned allowance for sampling risk. 
C)  risk of incorrect rejection. 
D)  population size and planned allowance for sampling risk. 
E)  planned allowance for sampling risk and risk of incorrect rejection.

Question 12

Which of the following statements is true about the determination whether to use statistical attribute sampling or nonstatistical sampling?

Accepted Answer

A)  Statistical attribute sampling is usually the best way to select exception reports to test the effectiveness of the manual followup procedure. 
B)  For controls that function infrequently, such as controls over management discretion in financial reporting that occur only quarterly, nonstatistical sampling is probably the most efficient way to determine how often the auditor wants to test the effectiveness of the control. 
C)  Nonstatistical sampling is most effective for larger populations. 
D)  Statistical sampling has become the norm for tests of controls. 
E)  Statistical sampling should always be used in tests of general controls, such as inspecting logs that document program changes, were the auditor wants to review the entire population but uses sampling to choose specific items to investigate a sample of the individual items. 
A)  Statistical attribute sampling is usually the best way to select exception reports to test the effectiveness of the manual followup procedure. 
B)  For controls that function infrequently, such as controls over management discretion in financial reporting that occur only quarterly, nonstatistical sampling is probably the most efficient way to determine how often the auditor wants to test the effectiveness of the control. 
C)  Nonstatistical sampling is most effective for larger populations. 
D)  Statistical sampling has become the norm for tests of controls. 
E)  Statistical sampling should always be used in tests of general controls, such as inspecting logs that document program changes, were the auditor wants to review the entire population but uses sampling to choose specific items to investigate a sample of the individual items.

Question 13

In the selection process for PPS sampling plans, it is necessary to determine the cumulative balance of the book values of the logical units.

Accepted Answer

A) True 
 B)False

Question 14

In evaluating sample results, if the upper misstatement limit is less than or equal to projected misstatement, the sample results support the conclusion that the population book value is not materially misstated.

Accepted Answer

A) True 
 B)False

Question 15

The most common selection method used in PPS sampling is:

Accepted Answer

A)  random selection. 
B)  haphazard selection. 
C)  systematic selection. 
D)  indiscriminate selection. 
E)  automatic selection. 
A)  random selection. 
B)  haphazard selection. 
C)  systematic selection. 
D)  indiscriminate selection. 
E)  automatic selection.

Question 16

Indicate the possible reasons and actions the auditor may take when the upper misstatement limit exceeds tolerable misstatement in a PPS sampling plan.

Accepted Answer

The possible reasons and actions are:
1.

Question 17

In PPS sampling plans, all logical sampling units that are greater than or equal to the sampling interval must be treated separately.

Accepted Answer

A) True 
 B)False

Question 18

The steps in PPS sampling are identical to those used in attribute sampling.

Accepted Answer

A) True 
 B)False

Question 19

In mean-per-unit-sampling, population size is:

Accepted Answer

A)  inversely related to sample size. 
B)  ignored in determining sample size. 
C)  critical. 
D)  assumed to be infinite by the statistical model used. 
E)  negligible. 
A)  inversely related to sample size. 
B)  ignored in determining sample size. 
C)  critical. 
D)  assumed to be infinite by the statistical model used. 
E)  negligible.

Question 20

In PPS sampling, the amount of the book value has a direct effect on the sample size.

Accepted Answer

A) True 
 B)False

Exam 13: Audit Sampling in Substantive Tests

In the evaluation of an MPU sampling plan where misstatements have been found, the auditor will not calculate:

The greatest impact on audit efficiency comes from the risk(s) of:

How does the auditor determine allowance for sampling risk in nonstatistical sampling?

Tolerable misstatement is the minimum misstatement that can exist in an account before it is considered materially misstated.

When using classical variables sampling, zero balances and different sign balances require special design consideration.

Which of the following is most likely to be given as an advantage of classical variables sampling over PPS sampling?

In specifying an acceptable level of risk of incorrect acceptance, the auditor should consider the:

In PPS sampling plans, sample size is usually determined using tables.

When no misstatements are found in a PPS sampling plan:

In the PPS sample size formula, which of the following is in the numerator?

In an MPU sampling plan, there is an inverse relationship between sample size and:

Which of the following statements is true about the determination whether to use statistical attribute sampling or nonstatistical sampling?

In the selection process for PPS sampling plans, it is necessary to determine the cumulative balance of the book values of the logical units.

In evaluating sample results, if the upper misstatement limit is less than or equal to projected misstatement, the sample results support the conclusion that the population book value is not materially misstated.

The most common selection method used in PPS sampling is:

Indicate the possible reasons and actions the auditor may take when the upper misstatement limit exceeds tolerable misstatement in a PPS sampling plan.

In PPS sampling plans, all logical sampling units that are greater than or equal to the sampling interval must be treated separately.

The steps in PPS sampling are identical to those used in attribute sampling.

In mean-per-unit-sampling, population size is:

In PPS sampling, the amount of the book value has a direct effect on the sample size.

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

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