Question 1

One of the ways to eliminate nonsampling risk is through

Accepted Answer

A) proper supervision and instruction of the client's employees. 
B) proper supervision and instruction of the audit team. 
C) the use of attribute sampling rather than variables sampling. 
D) controls that ensure the sample drawn is random and representative. 
A) proper supervision and instruction of the client's employees. 
B) proper supervision and instruction of the audit team. 
C) the use of attribute sampling rather than variables sampling. 
D) controls that ensure the sample drawn is random and representative.

Question 2

A method of sampling in which all the items in the population are divided into two or more subpopulations is

Accepted Answer

A) variables sampling. 
B) attribute sampling. 
C) stratified sampling. 
D) divisible sampling. 
A) variables sampling. 
B) attribute sampling. 
C) stratified sampling. 
D) divisible sampling.

Question 3

In attribute sampling,an advance estimate of the expected population exception rate is necessary to plan the appropriate sample size.The relationship of expected population exception rate (EPER)to sample size is

Accepted Answer

A) direct (small EPER = small sample). 
B) inverse (small EPER = large sample). 
C) a variable (sometimes small,sometimes large)dependent on other factors present. 
D) indeterminate. 
A) direct (small EPER = small sample). 
B) inverse (small EPER = large sample). 
C) a variable (sometimes small,sometimes large)dependent on other factors present. 
D) indeterminate.

Question 4

Establishing the tolerable exception rate (TER)requires

Accepted Answer

A) statistical frequency probability tables. 
B) random number tables. 
C) a computer program. 
D) professional judgment. 
A) statistical frequency probability tables. 
B) random number tables. 
C) a computer program. 
D) professional judgment.

Question 5

During the audit of the fixed asset section,the auditor decided to inspect source documents supporting all fixed asset additions exceeding $3000.This type of audit procedure is called a

Accepted Answer

A) census of the strata over $3000. 
B) analytical review. 
C) attribute sample. 
D) monetary unit sample. 
A) census of the strata over $3000. 
B) analytical review. 
C) attribute sample. 
D) monetary unit sample.

Question 6

What are the three phases that are similar in both statistical and nonstatistical sampling?

Accepted Answer

The three phases that are similar in bot

Question 7

The process that requires the calculation of an interval and then selects the items based on the size of the interval is

Accepted Answer

A) statistical sampling. 
B) random selection. 
C) systematic selection. 
D) computerized selection. 
A) statistical sampling. 
B) random selection. 
C) systematic selection. 
D) computerized selection.

Question 8

If all other factors specified in a sampling plan remain constant,changing the estimated population exception rate (EPER)from 2% to 4% would cause the required sample size to

Accepted Answer

A) increase. 
B) remain the same. 
C) decrease. 
D) become indeterminate. 
A) increase. 
B) remain the same. 
C) decrease. 
D) become indeterminate.

Question 9

A sample in which the characteristics of the sample are the same as those of the population is a(n)

Accepted Answer

A) random sample. 
B) variables sample. 
C) attribute sample. 
D) representative sample. 
A) random sample. 
B) variables sample. 
C) attribute sample. 
D) representative sample.

Question 10

You have recently been hired as an audit trainee with an internal audit department.Your first assignment will be to select the sample for a test of new capital assets acquired over the last two years.Your review of the internal audit files indicates that the last time this work was done the sample to be tested was selected on a judgmental nonstatistical basis.Based on your university/college auditing course,you believe the work offers good potential for the use of statistical sampling techniques.You know that you will have to be able to explain and justify your opinion to the internal audit manager.
Required:
Both statistical sampling and nonstatistical or judgmental sampling have advantages and disadvantages.Briefly state two advantages and two disadvantages of statistical sampling and one advantage and one disadvantage of nonstatistical sampling.

Accepted Answer

Advantages of statistical sampling:
•res

Question 11

One of the ways to reduce sampling risk is to

Accepted Answer

A) use an appropriate method of selecting sample items from the population. 
B) carefully design the audit procedures to be used. 
C) provide proper supervision and instruction of the audit team. 
D) use variables sampling rather than attribute sampling. 
A) use an appropriate method of selecting sample items from the population. 
B) carefully design the audit procedures to be used. 
C) provide proper supervision and instruction of the audit team. 
D) use variables sampling rather than attribute sampling.

Question 12

What are the different sample selection types that fall under probabilistic and nonprobabilistic sampling?

Accepted Answer

Under Probabilistic
-Directed sample sel

Question 13

What are the advantages and disadvantages of monetary unit sampling?

Accepted Answer

The advantages and disadvantages of mone

Question 14

The auditor wants to trace credits from the accounts receivable transaction history files to the duplicate bank deposit slips and other authorized sources as a test for fictitious credits in the data files.Which of the following sampling methods would be the least costly to use in this situation?

Accepted Answer

A) simple random 
B) block 
C) systematic 
D) probability proportionate-to-size 
A) simple random 
B) block 
C) systematic 
D) probability proportionate-to-size

Question 15

Whenever a statistical method is used,a decision rule determines whether the population is acceptable.The decision rule for dollar-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if

Accepted Answer

A) the upper error bound falls between the understatement and overstatement tolerable misstatement amounts." 
B) both the lower and upper error bound fall between the understatement and overstatement tolerable misstatement amounts." 
C) both the understatement and overstatement tolerable misstatement amounts fall between the upper and lower error bound." 
D) the overstatement tolerable misstatement amount falls between the lower and upper error bound." 
A) the upper error bound falls between the understatement and overstatement tolerable misstatement amounts." 
B) both the lower and upper error bound fall between the understatement and overstatement tolerable misstatement amounts." 
C) both the understatement and overstatement tolerable misstatement amounts fall between the upper and lower error bound." 
D) the overstatement tolerable misstatement amount falls between the lower and upper error bound."

Question 16

A)Describe the differences between statistical and nonstatistical sampling in terms of 1)the sample selection methods used,and 2)measurement (quantification)of sampling risk.B)Describe each of the three types of sample selection methods commonly associated with nonstatistical audit sampling.C)Directed sample selection is the selection of each item in the sample based on some judgment criteria established by the auditor.Describe three commonly used criteria.

Accepted Answer

A)Nonstatistical sampling differs from s

Question 17

Carrie found an error in the sample she tested from the population of accounts receivable that was over 90 days old.The error found by Carrie should be extrapolated to the population of

Accepted Answer

A) all past-due accounts receivable. 
B) accounts receivable over 90 days. 
C) all accounts receivable. 
D) current accounts receivable. 
A) all past-due accounts receivable. 
B) accounts receivable over 90 days. 
C) all accounts receivable. 
D) current accounts receivable.

Question 18

The occurrence rate or exception rate for attribute sampling is defined as the

Accepted Answer

A) exception rate that the auditor will permit in the population and still be willing to use the assessed control risk. 
B) risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than materiality. 
C) exception rate that the auditor expects to find in the population before testing begins. 
D) ratio of the items containing a specific attribute to the total number of population items. 
A) exception rate that the auditor will permit in the population and still be willing to use the assessed control risk. 
B) risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than materiality. 
C) exception rate that the auditor expects to find in the population before testing begins. 
D) ratio of the items containing a specific attribute to the total number of population items.

Question 19

In performing a review of his client's cash disbursements,a public accountant uses systematic sampling with a random start.The primary disadvantage of systematic sampling is that population items

Accepted Answer

A) must be reordered in a systematic pattern before the sample can be drawn. 
B) may occur in a systematic pattern,thus negating the randomness of the sample. 
C) may occur twice in the sample. 
D) must be replaced in the population after sampling to permit valid statistical inference. 
A) must be reordered in a systematic pattern before the sample can be drawn. 
B) may occur in a systematic pattern,thus negating the randomness of the sample. 
C) may occur twice in the sample. 
D) must be replaced in the population after sampling to permit valid statistical inference.

Question 20

As part of the audit program for the audit of sales,the auditor will "review sales transactions for large and unusual amounts." Which of the following types of sampling would be suitable for this audit procedure?

Accepted Answer

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

One of the ways to eliminate nonsampling risk is through

A method of sampling in which all the items in the population are divided into two or more subpopulations is

In attribute sampling,an advance estimate of the expected population exception rate is necessary to plan the appropriate sample size.The relationship of expected population exception rate (EPER)to sample size is

Establishing the tolerable exception rate (TER)requires

During the audit of the fixed asset section,the auditor decided to inspect source documents supporting all fixed asset additions exceeding $3000.This type of audit procedure is called a

What are the three phases that are similar in both statistical and nonstatistical sampling?

The process that requires the calculation of an interval and then selects the items based on the size of the interval is

If all other factors specified in a sampling plan remain constant,changing the estimated population exception rate (EPER)from 2% to 4% would cause the required sample size to

A sample in which the characteristics of the sample are the same as those of the population is a(n)

One of the ways to reduce sampling risk is to

What are the different sample selection types that fall under probabilistic and nonprobabilistic sampling?

What are the advantages and disadvantages of monetary unit sampling?

The auditor wants to trace credits from the accounts receivable transaction history files to the duplicate bank deposit slips and other authorized sources as a test for fictitious credits in the data files.Which of the following sampling methods would be the least costly to use in this situation?

Whenever a statistical method is used,a decision rule determines whether the population is acceptable.The decision rule for dollar-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if

Carrie found an error in the sample she tested from the population of accounts receivable that was over 90 days old.The error found by Carrie should be extrapolated to the population of

The occurrence rate or exception rate for attribute sampling is defined as the

In performing a review of his client's cash disbursements,a public accountant uses systematic sampling with a random start.The primary disadvantage of systematic sampling is that population items

As part of the audit program for the audit of sales,the auditor will "review sales transactions for large and unusual amounts." Which of the following types of sampling would be suitable for this audit procedure?

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

One of the ways to eliminate nonsampling risk is through

A method of sampling in which all the items in the population are divided into two or more subpopulations is

In attribute sampling,an advance estimate of the expected population exception rate is necessary to plan the appropriate sample size.The relationship of expected population exception rate (EPER)to sample size is

Establishing the tolerable exception rate (TER)requires

During the audit of the fixed asset section,the auditor decided to inspect source documents supporting all fixed asset additions exceeding $3000.This type of audit procedure is called a

What are the three phases that are similar in both statistical and nonstatistical sampling?

The process that requires the calculation of an interval and then selects the items based on the size of the interval is

If all other factors specified in a sampling plan remain constant,changing the estimated population exception rate (EPER)from 2% to 4% would cause the required sample size to

A sample in which the characteristics of the sample are the same as those of the population is a(n)

One of the ways to reduce sampling risk is to

What are the different sample selection types that fall under probabilistic and nonprobabilistic sampling?

What are the advantages and disadvantages of monetary unit sampling?

The auditor wants to trace credits from the accounts receivable transaction history files to the duplicate bank deposit slips and other authorized sources as a test for fictitious credits in the data files.Which of the following sampling methods would be the least costly to use in this situation?

Whenever a statistical method is used,a decision rule determines whether the population is acceptable.The decision rule for dollar-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if

Carrie found an error in the sample she tested from the population of accounts receivable that was over 90 days old.The error found by Carrie should be extrapolated to the population of

The occurrence rate or exception rate for attribute sampling is defined as the

In performing a review of his client's cash disbursements,a public accountant uses systematic sampling with a random start.The primary disadvantage of systematic sampling is that population items

As part of the audit program for the audit of sales,the auditor will "review sales transactions for large and unusual amounts." Which of the following types of sampling would be suitable for this audit procedure?

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