Exam 11: Audit Sampling Concepts

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. Which of the following would be termed the "attribute?" The

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

After the auditor has completed all the procedures, it is important that the auditor document the work performed and review the evidence to assess the conclusion reached. This is a highly subjective process that relies heavily on

The overall objectives of the audit test must be stated in terms of the

Nonsampling errors occur when audit tests do not uncover existing exceptions in the

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?

An example of judgmental sampling is

The auditing standards indicate that

In systematic selection, population size is divided by the number of sample items desired in order to determine the

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.

Helen found that the expense reports were not properly approved while the senior accounts payable clerk was on vacation in July. Helen decided to perform a test of control on the authorization of expense reports for all the months except for July, which she will test substantively. Helen is allowed to do this because

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

Kyle is performing a test of detail using a non-statistical sample. A) Can Kyle formally measure sampling error? B) What should Kyle consider in determining the sampling error?

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?

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

In statistical terms, acceptable risk of assessing control risk too low (ARACR) corresponds with

An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods

You are working on the testing of internal controls over price changes in the inventory system. You completed the controls testing to determine whether all price changes were approved by the senior accountant, by reference to master file change forms. In order to place reliance on this control, your audit supervisor has decided that the error rate in the population should be less than 1%. When you calculated your sample size, you used a confidence level of 90% and predicted an error rate of less than one percent. Based on these decisions, you examined 150 inventory price master file change forms. In your testing you uncovered two deviations. Based on these results, you calculate that the actual error rate in the population could be as high as 2.33%. Required: A) What actions are available to you regarding your planned reliance on the master file change controls? B) What are the advantages and disadvantages of each action? C) How would you decide which action to take?

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

When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, it is called