Question 1

Discuss the advantages and disadvantages of monetary unit sampling over other sampling methods.

Accepted Answer

Advantages of monetary unit sampling:
•I

Question 2

Which of the following is an accurate statement regarding how the acceptable risk of overreliance (ARO)and the acceptable risk of incorrect acceptance (ARIA)interact to affect evidence accumulation?

Accepted Answer

A) If internal controls are likely to be effective,preliminary control risk can be increased. 
B) A lower control risk requires a lower ARO in testing the controls,which requires a smaller sample size. 
C) If controls are found to be effective,control risk can remain low,which permits the auditor to increase ARIA,thereby requiring a smaller sample size in the substantive tests of details of balances. 
D) If misstatements are considered unlikely,ARIA will decrease,and the sample size will also decrease. 
A) If internal controls are likely to be effective,preliminary control risk can be increased. 
B) A lower control risk requires a lower ARO in testing the controls,which requires a smaller sample size. 
C) If controls are found to be effective,control risk can remain low,which permits the auditor to increase ARIA,thereby requiring a smaller sample size in the substantive tests of details of balances. 
D) If misstatements are considered unlikely,ARIA will decrease,and the sample size will also decrease.

Question 3

The auditor's principal objective when using a sample of tests of details of balances is whether the

Accepted Answer

A) account balance being audited is fairly stated. 
B) transactions being audited are free of misstatements. 
C) controls being tested are operating effectively. 
D) transactions and account balances being audited are fairly stated. 
A) account balance being audited is fairly stated. 
B) transactions being audited are free of misstatements. 
C) controls being tested are operating effectively. 
D) transactions and account balances being audited are fairly stated.

Question 4

________ is a method of projecting from the sample to the population to estimate the population misstatement.It assumes that misstatements in the unaudited population are proportional to the misstatements found in the sample.

Accepted Answer

A) Mean-per-unit estimation 
B) Point estimate 
C) Monetary unit 
D) Basic precision 
A) Mean-per-unit estimation 
B) Point estimate 
C) Monetary unit 
D) Basic precision

Question 5

The statistical methods used to evaluate monetary unit samples

Accepted Answer

A) neither exclude nor include units twice. 
B) may permit the inclusion of a unit in the sample more than once. 
C) do not permit a unit to be included in the sample more than once. 
D) ignore the possibility that a unit may be included in a sample more than once. 
A) neither exclude nor include units twice. 
B) may permit the inclusion of a unit in the sample more than once. 
C) do not permit a unit to be included in the sample more than once. 
D) ignore the possibility that a unit may be included in a sample more than once.

Question 6

If an auditor desires a greater level of assurance in auditing a balance,the acceptable risk of incorrect acceptance

Accepted Answer

A) is reduced. 
B) is increased. 
C) is not changed. 
D) may be reduced or increased depending upon other circumstances. 
A) is reduced. 
B) is increased. 
C) is not changed. 
D) may be reduced or increased depending upon other circumstances.

Question 7

When drawing statistical inferences about the population when using variables sampling,

Accepted Answer

A) a confidence interval cannot be calculated. 
B) there is always a possibility that the sample is not sufficiently representative of the population to provide a sample mean or standard deviation reasonably close to those of the population. 
C) the auditor does not know the reliability fo the statistical inference process that is used to draw the conclusions. 
D) all of the above are correct. 
A) a confidence interval cannot be calculated. 
B) there is always a possibility that the sample is not sufficiently representative of the population to provide a sample mean or standard deviation reasonably close to those of the population. 
C) the auditor does not know the reliability fo the statistical inference process that is used to draw the conclusions. 
D) all of the above are correct.

Question 8

To calculate the sample size using difference estimation sampling,it is not necessary for the auditors to have an advance population standard deviation estimate.

Accepted Answer

A) True 
 B)False

Question 9

MUS has the statistical simplicity of attributes sampling,yet provides a statistical result expressed as a percentage.

Accepted Answer

A) True 
 B)False

Question 10

Consider the steps in sampling for tests of details and for tests of controls.Explain the differences in applying sampling to these two types of tests.

Accepted Answer

The differ

Question 11

Tests for rates of occurrence are appropriately used in all but which of the following situations?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

The population standard deviation has a significant effect on the computed precision interval.

Accepted Answer

A) True 
 B)False

Question 13

There are four steps to generalize from the sample to the population using difference estimation sampling.Identify each of these four steps.

Accepted Answer

The four steps to generalize from the sa

Question 14

ARIA measures the auditor's desired assurance for an account balance.

Accepted Answer

A) True 
 B)False

Question 15

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was not materially misstated.It was,in fact,materially misstated.This situation illustrates the risk of

Accepted Answer

A) incorrect rejection. 
B) incorrect acceptance. 
C) assessing control risk too low. 
D) assessing control risk too high. 
A) incorrect rejection. 
B) incorrect acceptance. 
C) assessing control risk too low. 
D) assessing control risk too high.

Question 16

When dealing with variables sampling and sampling risk,it is important to understand that

Accepted Answer

A) for variables sampling,auditors uses ARIA but not ARIR. 
B) ARIR is of serious concern to the auditor because of potential legal implications. 
C) ARIA is a one-tailed statistical test. 
D) the confidence coefficients for ARIA are the same as the confidence level. 
A) for variables sampling,auditors uses ARIA but not ARIR. 
B) ARIR is of serious concern to the auditor because of potential legal implications. 
C) ARIA is a one-tailed statistical test. 
D) the confidence coefficients for ARIA are the same as the confidence level.

Question 17

There are 14 steps to audit sampling for tests of details of balances,divided into three sections: plan the sample,select the sample and perform the audit procedures,and evaluate the results.Discuss each of the steps included in the "evaluate the results" section for nonstatistical sampling.

Accepted Answer

The steps included in the "evaluate the

Question 18

In the test of details of balances,the auditor wants to make inferences about the entire population based on a sample.

Accepted Answer

A) True 
 B)False

Question 19

How might auditors include negative balances when using monetary unit sampling to evaluate a population?

Accepted Answer

There are two basic alternatives to test

Question 20

Tolerable misstatement is inversely related to sample size.

Accepted Answer

A) True 
 B)False

Exam 17: Audit Sampling for Tests of Details of Balances

Discuss the advantages and disadvantages of monetary unit sampling over other sampling methods.

Which of the following is an accurate statement regarding how the acceptable risk of overreliance (ARO)and the acceptable risk of incorrect acceptance (ARIA)interact to affect evidence accumulation?

The auditor's principal objective when using a sample of tests of details of balances is whether the

________ is a method of projecting from the sample to the population to estimate the population misstatement.It assumes that misstatements in the unaudited population are proportional to the misstatements found in the sample.

The statistical methods used to evaluate monetary unit samples

If an auditor desires a greater level of assurance in auditing a balance,the acceptable risk of incorrect acceptance

When drawing statistical inferences about the population when using variables sampling,

To calculate the sample size using difference estimation sampling,it is not necessary for the auditors to have an advance population standard deviation estimate.

MUS has the statistical simplicity of attributes sampling,yet provides a statistical result expressed as a percentage.

Consider the steps in sampling for tests of details and for tests of controls.Explain the differences in applying sampling to these two types of tests.

Tests for rates of occurrence are appropriately used in all but which of the following situations?

The population standard deviation has a significant effect on the computed precision interval.

There are four steps to generalize from the sample to the population using difference estimation sampling.Identify each of these four steps.

ARIA measures the auditor's desired assurance for an account balance.

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was not materially misstated.It was,in fact,materially misstated.This situation illustrates the risk of

When dealing with variables sampling and sampling risk,it is important to understand that

There are 14 steps to audit sampling for tests of details of balances,divided into three sections: plan the sample,select the sample and perform the audit procedures,and evaluate the results.Discuss each of the steps included in the "evaluate the results" section for nonstatistical sampling.

In the test of details of balances,the auditor wants to make inferences about the entire population based on a sample.

How might auditors include negative balances when using monetary unit sampling to evaluate a population?

Tolerable misstatement is inversely related to sample size.

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