Question 1

Which of the following is a method of reducing non-sampling risk?

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 attributes sampling rather than variables sampling. 
D)  Controls to ensure that 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 attributes sampling rather than variables sampling. 
D)  Controls to ensure that the sample drawn is random and representative.

Question 2

Increasing the expected failure rate will cause the sample size to increase.

Accepted Answer

A) True 
 B)False

Question 3

Extracting data from the client's computer system is one of the tasks that can be performed by GAS.

Accepted Answer

A) True 
 B)False

Question 4

Sampling factors.
List the four important decisions an auditor must make when deciding to use sampling.

Accepted Answer

When deciding to use sampling techniques

Question 5

The expected population deviation rate is the auditor's best estimate of the percentage of transactions processed for which a control is not effectively applied.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

Accepted Answer

A)  Tolerable failure rate. 
B)  Allowable risk of assessing control risk too low. 
C)  Expected failure rate. 
D)  Allowance for sampling error. 
A)  Tolerable failure rate. 
B)  Allowable risk of assessing control risk too low. 
C)  Expected failure rate. 
D)  Allowance for sampling error.

Question 7

Either nonstatistical or statistical sampling is appropriate for substantive tests of details.

Accepted Answer

A) True 
 B)False

Question 8

Risks of sampling in tests of controls.
Define the following terms as they relate to sampling for tests of controls:
1.tolerable failure rate
2.expected failure rate

Accepted Answer

Tolerable failure rate is the level at w

Question 9

In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what manners?

Accepted Answer

A)  Qualitatively and quantitatively. 
B)  Absolutely and proportionately. 
C)  Haphazardly and randomly. 
D)  Methodically and systematically. 
A)  Qualitatively and quantitatively. 
B)  Absolutely and proportionately. 
C)  Haphazardly and randomly. 
D)  Methodically and systematically.

Question 10

An example of attribute testing involves obtaining evidence that the client has matched the vendor invoice details with a purchase order and receiving report before payment approval.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a major disadvantage of MUS sampling?

Accepted Answer

A)  Sample selection is relatively easy. 
B)  Sample sizes are relatively small. 
C)  It is easy way to test for understatement. 
D)  It directly controls for the risk of incorrect acceptance. 
A)  Sample selection is relatively easy. 
B)  Sample sizes are relatively small. 
C)  It is easy way to test for understatement. 
D)  It directly controls for the risk of incorrect acceptance.

Question 12

Which of the following does the design of a MUS sample not require the auditor to determine?

Accepted Answer

A)  Risk of incorrect acceptance. 
B)  Inherent risk. 
C)  Ratio of expected misstatement to tolerable misstatement. 
D)  Ratio of tolerable misstatement to the total population value. 
A)  Risk of incorrect acceptance. 
B)  Inherent risk. 
C)  Ratio of expected misstatement to tolerable misstatement. 
D)  Ratio of tolerable misstatement to the total population value.

Question 13

When evaluating an MUS sample, if the auditor finds no misstatements in the sample, the misstatement projection is zero dollars, and the total estimated misstatement will equal the projected misstatement for items in lower-stratum.

Accepted Answer

A) True 
 B)False

Question 14

In selecting a sample for attribute testing, block sampling involves which of the following approaches?

Accepted Answer

A)  Each item in the population having an equal chance of selection. 
B)  Every nth item being selected after a random start. 
C)  An arbitrary selection with no conscious bias. 
D)  Selecting all items on a day or week. 
A)  Each item in the population having an equal chance of selection. 
B)  Every nth item being selected after a random start. 
C)  An arbitrary selection with no conscious bias. 
D)  Selecting all items on a day or week.

Question 15

The tolerable misstatement is the confidence level needed to infer population values.

Accepted Answer

A) True 
 B)False

Question 16

In selecting a sample for attribute testing, haphazard selection involves which of the following approaches?

Accepted Answer

A)  Each item in the population having an equal chance of selection. 
B)  Every nth item being selected after a random start. 
C)  An arbitrary selection with no conscious bias. 
D)  Selecting all items on a day or week. 
A)  Each item in the population having an equal chance of selection. 
B)  Every nth item being selected after a random start. 
C)  An arbitrary selection with no conscious bias. 
D)  Selecting all items on a day or week.

Question 17

Statistical sampling combines the theory of probability and statistical inference with audit judgment and experience.

Accepted Answer

A) True 
 B)False

Question 18

Dividing the population into relatively homogeneous groups in order to reduce sample size is the definition of which of the following terms?

Accepted Answer

A)  Ratio estimation. 
B)  Difference estimation. 
C)  Stratification. 
D)  MUS sampling. 
A)  Ratio estimation. 
B)  Difference estimation. 
C)  Stratification. 
D)  MUS sampling.

Question 19

Nonsampling risk.
What is nonsampling risk and how can it be eliminated?

Accepted Answer

Nonsampling risk includes all aspects of

Question 20

In using MUS, once the auditor has determined the sample size, which of the following is needed to determine the sampling interval?

Accepted Answer

A)  Expected misstatement. 
B)  Tolerable misstatement. 
C)  Population size. 
D)  Mean. 
A)  Expected misstatement. 
B)  Tolerable misstatement. 
C)  Population size. 
D)  Mean.

Which of the following is a method of reducing non-sampling risk?

Increasing the expected failure rate will cause the sample size to increase.

Extracting data from the client's computer system is one of the tasks that can be performed by GAS.

Sampling factors. List the four important decisions an auditor must make when deciding to use sampling.

The expected population deviation rate is the auditor's best estimate of the percentage of transactions processed for which a control is not effectively applied.

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

Either nonstatistical or statistical sampling is appropriate for substantive tests of details.

Risks of sampling in tests of controls. Define the following terms as they relate to sampling for tests of controls: 1.tolerable failure rate 2.expected failure rate

In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what manners?

An example of attribute testing involves obtaining evidence that the client has matched the vendor invoice details with a purchase order and receiving report before payment approval.

Which of the following is a major disadvantage of MUS sampling?

Which of the following does the design of a MUS sample not require the auditor to determine?

When evaluating an MUS sample, if the auditor finds no misstatements in the sample, the misstatement projection is zero dollars, and the total estimated misstatement will equal the projected misstatement for items in lower-stratum.

In selecting a sample for attribute testing, block sampling involves which of the following approaches?

The tolerable misstatement is the confidence level needed to infer population values.

In selecting a sample for attribute testing, haphazard selection involves which of the following approaches?

Statistical sampling combines the theory of probability and statistical inference with audit judgment and experience.

Dividing the population into relatively homogeneous groups in order to reduce sample size is the definition of which of the following terms?

Nonsampling risk. What is nonsampling risk and how can it be eliminated?

In using MUS, once the auditor has determined the sample size, which of the following is needed to determine the sampling interval?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

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Exam 8: Specialized Audit Tools: Sampling and Generalized Audit Software

Which of the following is a method of reducing non-sampling risk?

Increasing the expected failure rate will cause the sample size to increase.

Extracting data from the client's computer system is one of the tasks that can be performed by GAS.

Sampling factors. List the four important decisions an auditor must make when deciding to use sampling.

The expected population deviation rate is the auditor's best estimate of the percentage of transactions processed for which a control is not effectively applied.

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

Either nonstatistical or statistical sampling is appropriate for substantive tests of details.

Risks of sampling in tests of controls. Define the following terms as they relate to sampling for tests of controls: 1.tolerable failure rate 2.expected failure rate

In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what manners?

An example of attribute testing involves obtaining evidence that the client has matched the vendor invoice details with a purchase order and receiving report before payment approval.

Which of the following is a major disadvantage of MUS sampling?

Which of the following does the design of a MUS sample not require the auditor to determine?

When evaluating an MUS sample, if the auditor finds no misstatements in the sample, the misstatement projection is zero dollars, and the total estimated misstatement will equal the projected misstatement for items in lower-stratum.

In selecting a sample for attribute testing, block sampling involves which of the following approaches?

The tolerable misstatement is the confidence level needed to infer population values.

In selecting a sample for attribute testing, haphazard selection involves which of the following approaches?

Statistical sampling combines the theory of probability and statistical inference with audit judgment and experience.

Dividing the population into relatively homogeneous groups in order to reduce sample size is the definition of which of the following terms?

Nonsampling risk. What is nonsampling risk and how can it be eliminated?

In using MUS, once the auditor has determined the sample size, which of the following is needed to determine the sampling interval?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters