Question 1

The auditor has selected a sequence of 200 payroll cheques to verify the numerical continuity of the cheque numbers.What type of sampling is the auditor doing?

Accepted Answer

A) haphazard 
B) systematic 
C) directed 
D) block 
A) haphazard 
B) systematic 
C) directed 
D) block

Question 2

You are analyzing the exceptions that arose after your control testing of credit limit approvals.There were four exceptions where credit had not been approved.One was for a customer that was subsequently placed on C.O.D.(cash on delivery),and three occurred while the business was in the middle of its busy season,processing three times more transactions than most other times of the year.The company's busy season normally lasts about two months.
Required:A)What is an anomaly? B)Are any of the exceptions that you found anomalous? Why or why not? C)Provide an example of a credit approval testing exception that would be anomalous.

Accepted Answer

A)An anomaly is an exception or misstate

Question 3

There are 14 steps to audit sampling,divided into four sections: plan the sample,select the sample,perform the audit procedures,and evaluate the results.Discuss each of the steps that comprise the "plan the sample" section for attribute sampling.

Accepted Answer

The steps that comprise the "plan the sa

Question 4

One of the causes of nonsampling error is

Accepted Answer

A) the use of inappropriate or ineffective audit procedures. 
B) failure to draw a random sample. 
C) failure to draw a representative sample. 
D) the use of attribute sampling instead of variables sampling. 
A) the use of inappropriate or ineffective audit procedures. 
B) failure to draw a random sample. 
C) failure to draw a representative sample. 
D) the use of attribute sampling instead of variables sampling.

Question 5

What is audit sampling and what are the instances when the auditor finds sampling appropriate?

Accepted Answer

Audit sampling is a selective examinatio

Question 6

The auditor has completed her testing of 100 sales invoices and has concluded that the revenue balance is fairly stated.The auditor failed to notice that all the items she tested were missing shipping records to the customer.It was later found out that the client created fake invoices to increase its revenue and receivable balances.What risk did the auditor fail to mitigate?

Accepted Answer

A) sampling risk 
B) nonsampling risk 
C) due care risk 
D) business risk 
A) sampling risk 
B) nonsampling risk 
C) due care risk 
D) business risk

Question 7

Which of the following best describes what the auditor means by the exception rate in the attribute sampling plan? The

Accepted Answer

A) number of errors that can reasonably be expected to be found in a population. 
B) frequency with which a certain characteristic occurs within a population. 
C) degree of confidence that the sample is representative of the population. 
D) dollar range within which the true population total can be expected to fall. 
A) number of errors that can reasonably be expected to be found in a population. 
B) frequency with which a certain characteristic occurs within a population. 
C) degree of confidence that the sample is representative of the population. 
D) dollar range within which the true population total can be expected to fall.

Question 8

A)Discuss what is meant by "sampling risk." B)Discuss what is meant by "nonsampling risk."C)Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.D)Discuss two ways the auditor can control sampling risk.

Accepted Answer

A)Sampling risk occurs when the sample i

Question 9

Attribute sampling would be an appropriate method to use on which one of the following procedures in an audit program?

Accepted Answer

A) Review sales transactions for large and unreasonable amounts. 
B) Observe whether the duties of the accounts receivable clerk are separate from handling cash. 
C) Examine a sample of duplicate sales invoices for credit approval by the credit manager. 
D) Review the aged schedule of accounts receivable to determine if amounts receivable from officers are included. 
A) Review sales transactions for large and unreasonable amounts. 
B) Observe whether the duties of the accounts receivable clerk are separate from handling cash. 
C) Examine a sample of duplicate sales invoices for credit approval by the credit manager. 
D) Review the aged schedule of accounts receivable to determine if amounts receivable from officers are included.

Question 10

The auditing standards indicate that

Accepted Answer

A) it is preferable to use statistical sampling instead of nonstatistical sampling. 
B) it is preferable to use nonstatistical sampling instead of statistical sampling. 
C) it is equally acceptable to use either statistical or nonstatistical sampling. 
D) nonstatistical sampling should only be used if statistical sampling is too costly to use. 
A) it is preferable to use statistical sampling instead of nonstatistical sampling. 
B) it is preferable to use nonstatistical sampling instead of statistical sampling. 
C) it is equally acceptable to use either statistical or nonstatistical sampling. 
D) nonstatistical sampling should only be used if statistical sampling is too costly to use.

Question 11

One of the purposes of using statistical sampling is to quantify sampling risk.For which of the following audit tests would sampling risk be zero?

Accepted Answer

A) The auditor used monetary unit sampling to select a sample of payroll payments. 
B) The auditor used attribute sampling to select a sample of shipping documents. 
C) The auditor sent empty (zero balance)external confirmations to suppliers with large dollar balances. 
D) The auditor sent external confirmations to all financial institutions used by the client. 
A) The auditor used monetary unit sampling to select a sample of payroll payments. 
B) The auditor used attribute sampling to select a sample of shipping documents. 
C) The auditor sent empty (zero balance)external confirmations to suppliers with large dollar balances. 
D) The auditor sent external confirmations to all financial institutions used by the client.

Question 12

When systematic sample selection is used,the first item is selected randomly and all other items are selected automatically.If the characteristic of interest is not distributed randomly in the population,the systematic selection creates the possibility of

Accepted Answer

A) bias. 
B) abnormal frequency distribution. 
C) judgmental intervention in the process. 
D) selecting mostly larger dollar items. 
A) bias. 
B) abnormal frequency distribution. 
C) judgmental intervention in the process. 
D) selecting mostly larger dollar items.

Question 13

What is the difference between probabilistic and nonprobabilistic sample selection?

Accepted Answer

When the auditor uses probabilistic samp

Question 14

The acceptable risk of incorrect acceptance (ARIA)has a significant effect on sample size.The relationship of ARIA to sample size is

Accepted Answer

A) direct (larger ARIA = larger sample). 
B) inverse (larger ARIA = smaller sample). 
C) variable (sometimes larger,sometimes smaller). 
D) not determinable. 
A) direct (larger ARIA = larger sample). 
B) inverse (larger ARIA = smaller sample). 
C) variable (sometimes larger,sometimes smaller). 
D) not determinable.

Question 15

An auditor used sampling that has the statistical simplicity of attribute sampling yet provides a statistical result expressed in dollars.The auditor is using what type of sampling?

Accepted Answer

A) attribute sampling 
B) discovery sampling 
C) monetary unit sampling 
D) variable estimation sampling 
A) attribute sampling 
B) discovery sampling 
C) monetary unit sampling 
D) variable estimation sampling

Question 16

The auditor has decided to audit all accounts receivable amounts that are over 120 days old and over $5000.What type of sample selection method is the auditor using?

Accepted Answer

A) haphazard 
B) systematic 
C) directed 
D) block 
A) haphazard 
B) systematic 
C) directed 
D) block

Question 17

When statistical sampling is used,the sample selected must be a probabilistic one.In addition,the auditor should

Accepted Answer

A) use the haphazard selection method to make sure that the sample is properly selected. 
B) use appropriate statistical evaluation methods of nonsampling risk computations. 
C) request the client to review the sample and approve all items that are selected. 
D) use appropriate statistical evaluation methods of sampling risk computations. 
A) use the haphazard selection method to make sure that the sample is properly selected. 
B) use appropriate statistical evaluation methods of nonsampling risk computations. 
C) request the client to review the sample and approve all items that are selected. 
D) use appropriate statistical evaluation methods of sampling risk computations.

Question 18

To ensure that all the population items will be properly subjected to the sample selection process,the auditor should

Accepted Answer

A) use a random number generator for sample selection. 
B) use monetary unit sample selection methods. 
C) document the range of document numbers in use by the client. 
D) test the population for completeness. 
A) use a random number generator for sample selection. 
B) use monetary unit sample selection methods. 
C) document the range of document numbers in use by the client. 
D) test the population for completeness.

Question 19

An example of judgmental sampling is

Accepted Answer

A) block sampling. 
B) simple random sample selection. 
C) systematic sample selection. 
D) proportionate-to-size sample selection. 
A) block sampling. 
B) simple random sample selection. 
C) systematic sample selection. 
D) proportionate-to-size sample selection.

Question 20

The final step in the evaluation of the audit results is the decision to

Accepted Answer

A) determine the acceptability of the population. 
B) determine sampling error and calculate the estimated total population error. 
C) analyze exceptions or misstatements. 
D) determine the error in each sample. 
A) determine the acceptability of the population. 
B) determine sampling error and calculate the estimated total population error. 
C) analyze exceptions or misstatements. 
D) determine the error in each sample.

The auditor has selected a sequence of 200 payroll cheques to verify the numerical continuity of the cheque numbers.What type of sampling is the auditor doing?

There are 14 steps to audit sampling,divided into four sections: plan the sample,select the sample,perform the audit procedures,and evaluate the results.Discuss each of the steps that comprise the "plan the sample" section for attribute sampling.

One of the causes of nonsampling error is

What is audit sampling and what are the instances when the auditor finds sampling appropriate?

Which of the following best describes what the auditor means by the exception rate in the attribute sampling plan? The

A)Discuss what is meant by "sampling risk." B)Discuss what is meant by "nonsampling risk."C)Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.D)Discuss two ways the auditor can control sampling risk.

Attribute sampling would be an appropriate method to use on which one of the following procedures in an audit program?

The auditing standards indicate that

One of the purposes of using statistical sampling is to quantify sampling risk.For which of the following audit tests would sampling risk be zero?

When systematic sample selection is used,the first item is selected randomly and all other items are selected automatically.If the characteristic of interest is not distributed randomly in the population,the systematic selection creates the possibility of

What is the difference between probabilistic and nonprobabilistic sample selection?

The acceptable risk of incorrect acceptance (ARIA)has a significant effect on sample size.The relationship of ARIA to sample size is

An auditor used sampling that has the statistical simplicity of attribute sampling yet provides a statistical result expressed in dollars.The auditor is using what type of sampling?

The auditor has decided to audit all accounts receivable amounts that are over 120 days old and over $5000.What type of sample selection method is the auditor using?

When statistical sampling is used,the sample selected must be a probabilistic one.In addition,the auditor should

To ensure that all the population items will be properly subjected to the sample selection process,the auditor should

An example of judgmental sampling is

The final step in the evaluation of the audit results is the decision to

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 11: Audit Sampling Concepts

The auditor has selected a sequence of 200 payroll cheques to verify the numerical continuity of the cheque numbers.What type of sampling is the auditor doing?

There are 14 steps to audit sampling,divided into four sections: plan the sample,select the sample,perform the audit procedures,and evaluate the results.Discuss each of the steps that comprise the "plan the sample" section for attribute sampling.

One of the causes of nonsampling error is

What is audit sampling and what are the instances when the auditor finds sampling appropriate?

Which of the following best describes what the auditor means by the exception rate in the attribute sampling plan? The

A)Discuss what is meant by "sampling risk." B)Discuss what is meant by "nonsampling risk."C)Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.D)Discuss two ways the auditor can control sampling risk.

Attribute sampling would be an appropriate method to use on which one of the following procedures in an audit program?

The auditing standards indicate that

One of the purposes of using statistical sampling is to quantify sampling risk.For which of the following audit tests would sampling risk be zero?

When systematic sample selection is used,the first item is selected randomly and all other items are selected automatically.If the characteristic of interest is not distributed randomly in the population,the systematic selection creates the possibility of

What is the difference between probabilistic and nonprobabilistic sample selection?

The acceptable risk of incorrect acceptance (ARIA)has a significant effect on sample size.The relationship of ARIA to sample size is

An auditor used sampling that has the statistical simplicity of attribute sampling yet provides a statistical result expressed in dollars.The auditor is using what type of sampling?

The auditor has decided to audit all accounts receivable amounts that are over 120 days old and over $5000.What type of sample selection method is the auditor using?

When statistical sampling is used,the sample selected must be a probabilistic one.In addition,the auditor should

To ensure that all the population items will be properly subjected to the sample selection process,the auditor should

An example of judgmental sampling is

The final step in the evaluation of the audit results is the decision to

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters