Exam 11: Audit Sampling Concepts

You have just been given the approval to conduct statistical sampling for the audit of capital assets acquisitions. Previously, this work was completed using a judgmental sample. Required: Explain the key areas where decisions need to be made when conducting audit work using a statistical sample.

The tolerable exception rate (TER) has a significant effect on sample size. The relationship of TER to sample size is

As part of the audit of sales, the auditor has used attribute sampling to select a sample of sales invoices. The auditor has examined the duplicate sales invoice to determine whether it was approved for credit. The client has a December year end. In October, the auditor conducted the interim audit and drew a sample of 40 items that covered the period from January to September. In order to be able to generalize to the sales population, the auditor should also

One of the ways to reduce sampling risk is to

Assume that the client's internal controls require a clerk to attach a shipping document to every duplicate sales invoice but this procedure is not followed exactly 3 percent of the time. If the auditor selects a sample of 200 duplicate sales invoices, which of the following sample results is most representative of the population?

An increase in the sample size has the effect of decreasing the sampling error if the

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?

Establishing the tolerable exception rate (TER) requires

The most common method used for performing statistical tests of controls 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

One of the causes of nonsampling error is

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

An underlying feature of the random-based selection of items is that each

An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the

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

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

Sampling risk (sampling error) is an inherent part of sampling that results from

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

A statistical method used to estimate the proportion of items in a population containing a characteristic of interest 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