Question 1

When choosing the appropriate acceptable risk of overreliance,the auditor needs to

Accepted Answer

A) rely on his/her professional judgment. 
B) err on the side of conservatism. 
C) consult the professional standards. 
D) follow SEC guidelines. 
A) rely on his/her professional judgment. 
B) err on the side of conservatism. 
C) consult the professional standards. 
D) follow SEC guidelines.

Question 2

Which of the following would have the least impact in determining sample size?

Accepted Answer

A) acceptable risk of overreliance 
B) risk of assessing control risk too low 
C) tolerable exception rate 
D) population size 
A) acceptable risk of overreliance 
B) risk of assessing control risk too low 
C) tolerable exception rate 
D) population size

Question 3

Place the following steps in their proper order: 1. Analyze exceptions.
2) Select the sample.
3) Define attributes and exception conditions.
4) State the objectives of the audit test.
5) Specify the tolerable exception rate.

Accepted Answer

A) 1,3,2,4,5. 
B) 4,3,1,2,5. 
C) 4,3,5,2,1. 
D) 1,2,3,4,5. 
A) 1,3,2,4,5. 
B) 4,3,1,2,5. 
C) 4,3,5,2,1. 
D) 1,2,3,4,5.

Question 4

Which of the following statements is most correct?

Accepted Answer

A) A sample of all items of a population will eliminate sampling risk,but increase nonsampling risk. 
B) The use of an appropriate sample selection technique ensures a representative sample. 
C) The auditor's failure to recognize an exception is a significant cause of sampling risk. 
D) The use of inappropriate audit procedures is a significant cause of nonsampling risk. 
A) A sample of all items of a population will eliminate sampling risk,but increase nonsampling risk. 
B) The use of an appropriate sample selection technique ensures a representative sample. 
C) The auditor's failure to recognize an exception is a significant cause of sampling risk. 
D) The use of inappropriate audit procedures is a significant cause of nonsampling risk.

Question 5

Which of the following is an accurate statement regarding sampling distribution?

Accepted Answer

A) A sampling distribution is a sample with characteristics the same as those of the population. 
B) Sampling distributions allow the auditor to make probability statements about the likely representativeness of any sample that is in the distribution. 
C) Each population exception rate and sample size has the same sampling distribution. 
D) Auditors cannot use sampling distributions to draw statistical conclusions about the unknown population being sampled. 
A) A sampling distribution is a sample with characteristics the same as those of the population. 
B) Sampling distributions allow the auditor to make probability statements about the likely representativeness of any sample that is in the distribution. 
C) Each population exception rate and sample size has the same sampling distribution. 
D) Auditors cannot use sampling distributions to draw statistical conclusions about the unknown population being sampled.

Question 6

The use of haphazard sample selection is encouraged under professional auditing standards.

Accepted Answer

A) True 
 B)False

Question 7

Auditors who prefer statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its ability to

Accepted Answer

A) quantify sampling risk. 
B) promote a more legally defensible procedural approach. 
C) define the precision required to provide audit satisfaction. 
D) establish conclusive audit evidence with decreased audit effort. 
A) quantify sampling risk. 
B) promote a more legally defensible procedural approach. 
C) define the precision required to provide audit satisfaction. 
D) establish conclusive audit evidence with decreased audit effort.

Question 8

As the auditor,you are assessing the proper sample size to use in testing controls.When using attributes sampling,which of the following is most correct?

Accepted Answer

A) A 10% change in population size will have the least effect on sample size. 
B) A 10% change in the tolerable deviation rate will have the least effect on sample size. 
C) A 10% change in the expected deviation rate will have the least effect on sample size. 
D) A 10% change in the tolerable will have the least effect on sample size. 
A) A 10% change in population size will have the least effect on sample size. 
B) A 10% change in the tolerable deviation rate will have the least effect on sample size. 
C) A 10% change in the expected deviation rate will have the least effect on sample size. 
D) A 10% change in the tolerable will have the least effect on sample size.

Question 9

If the auditor decides to assess control risk at the moderate level in a private company audit,when in previous years the auditor set control risk at the maximum level,then tests of controls for the current year would be

Accepted Answer

A) increased in number. 
B) reduced in number. 
C) not performed. 
D) unchanged from prior planned settings. 
A) increased in number. 
B) reduced in number. 
C) not performed. 
D) unchanged from prior planned settings.

Question 10

Which of the following statements is correct when dealing with sampling for exception rates?

Accepted Answer

A) The term exception refers to both deviations from the client's control procedures and amounts that are not monetarily correct. 
B) When used with sampling,the term deviation is synonymous with the term exception. 
C) The actual population exception rate is the same as the sample exception rate. 
D) In using audit sampling for exception rates,the auditor is most concerned with the confidence interval. 
A) The term exception refers to both deviations from the client's control procedures and amounts that are not monetarily correct. 
B) When used with sampling,the term deviation is synonymous with the term exception. 
C) The actual population exception rate is the same as the sample exception rate. 
D) In using audit sampling for exception rates,the auditor is most concerned with the confidence interval.

Question 11

Which of the following is most correct when using audit sampling for exception rates?

Accepted Answer

A) The auditor is concerned with the lowest rate. 
B) The auditor is concerned with the highest rate. 
C) The auditor is concerned with the average on previous audits. 
D) The auditor is not concerned with the exception rate for audits of nonpublic companies. 
A) The auditor is concerned with the lowest rate. 
B) The auditor is concerned with the highest rate. 
C) The auditor is concerned with the average on previous audits. 
D) The auditor is not concerned with the exception rate for audits of nonpublic companies.

Question 12

In attributes sampling,an estimate of the expected population exception rate is necessary to plan the 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 13

When using nonstatistical sampling,the sample must be a probabilistic one.

Accepted Answer

A) True 
 B)False

Question 14

A sample of all items in a population will have a zero sampling risk.

Accepted Answer

A) True 
 B)False

Question 15

The risk which the auditor is willing to take in accepting a control as being effective when the True population exception rate is greater than a tolerable rate is the

Accepted Answer

A) finite correction factor. 
B) tolerable exception rate. 
C) acceptable risk of overreliance. 
D) estimated population exception rate. 
A) finite correction factor. 
B) tolerable exception rate. 
C) acceptable risk of overreliance. 
D) estimated population exception rate.

Question 16

When planning the audit sample,

Accepted Answer

A) one objective of the tests of controls is to test the effectiveness of the controls. 
B) audit sampling applies to analytical procedures. 
C) audit sampling generally applies to automated controls. 
D) the auditor must generalize from the sample to the population. 
A) one objective of the tests of controls is to test the effectiveness of the controls. 
B) audit sampling applies to analytical procedures. 
C) audit sampling generally applies to automated controls. 
D) the auditor must generalize from the sample to the population.

Question 17

Which of the following statements is not correct regarding probabilistic and nonprobabilistic sample selection?

Accepted Answer

A) In probabilistic selection,every population item has a known chance of being selected. 
B) It is acceptable to evaluate a nonprobabilistic sample using statistical methods. 
C) Probabilistic selection is required for all statistical sampling methods. 
D) Both probabilistic and nonprobabilistic methods are acceptable and commonly used. 
A) In probabilistic selection,every population item has a known chance of being selected. 
B) It is acceptable to evaluate a nonprobabilistic sample using statistical methods. 
C) Probabilistic selection is required for all statistical sampling methods. 
D) Both probabilistic and nonprobabilistic methods are acceptable and commonly used.

Question 18

The process which 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 sample selection. 
C) systematic sample selection. 
D) computerized sample selection. 
A) statistical sampling. 
B) random sample selection. 
C) systematic sample selection. 
D) computerized sample selection.

Question 19

Describe each of the four types of sample selection methods commonly associated with statistical audit sampling.

Accepted Answer

Four types of sample selection methods c

Question 20

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

Accepted Answer

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

Exam 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

When choosing the appropriate acceptable risk of overreliance,the auditor needs to

Which of the following would have the least impact in determining sample size?

Place the following steps in their proper order: 1. Analyze exceptions. 2) Select the sample. 3) Define attributes and exception conditions. 4) State the objectives of the audit test. 5) Specify the tolerable exception rate.

Which of the following statements is most correct?

Which of the following is an accurate statement regarding sampling distribution?

The use of haphazard sample selection is encouraged under professional auditing standards.

Auditors who prefer statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its ability to

As the auditor,you are assessing the proper sample size to use in testing controls.When using attributes sampling,which of the following is most correct?

If the auditor decides to assess control risk at the moderate level in a private company audit,when in previous years the auditor set control risk at the maximum level,then tests of controls for the current year would be

Which of the following statements is correct when dealing with sampling for exception rates?

Which of the following is most correct when using audit sampling for exception rates?

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

When using nonstatistical sampling,the sample must be a probabilistic one.

A sample of all items in a population will have a zero sampling risk.

The risk which the auditor is willing to take in accepting a control as being effective when the True population exception rate is greater than a tolerable rate is the

When planning the audit sample,

Which of the following statements is not correct regarding probabilistic and nonprobabilistic sample selection?

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

Describe each of the four types of sample selection methods commonly associated with statistical audit sampling.

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

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Audit Evidence

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Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

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Audit of the Capital Acquisition and Repayment Cycle

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Completing the Audit

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