Question 1

Which of the following is a correct statement?

Accepted Answer

A) When internal controls are effective,control risk can be reduced,and therefore the auditor will decrease the ARIA. 
B) There is a direct relationship between ARIA and the required sample size. 
C) A lower control risk requires a lower ARO in testing the controls. 
D) ARO measures the auditor's desired assurance for an account balance. 
A) When internal controls are effective,control risk can be reduced,and therefore the auditor will decrease the ARIA. 
B) There is a direct relationship between ARIA and the required sample size. 
C) A lower control risk requires a lower ARO in testing the controls. 
D) ARO measures the auditor's desired assurance for an account balance.

Question 2

The method used to measure the estimated total misstatement amount in a population when there is both a recorded value and an audited value for each item in the sample is

Accepted Answer

A) difference estimation. 
B) mean-per-unit estimation. 
C) ratio estimation. 
D) monetary unit sampling. 
A) difference estimation. 
B) mean-per-unit estimation. 
C) ratio estimation. 
D) monetary unit sampling.

Question 3

In stratified sampling,a maximum of four stratum can be used.

Accepted Answer

A) True 
 B)False

Question 4

Calculating the sample size using monetary unit sampling depends on which of the following factors?

Accepted Answer

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

Question 5

An auditor using nonstatistical sampling cannot formally measure sampling error.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following item(s)are needed to determine the sample size using MUS?

Accepted Answer

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

Question 7

The most important difference among tests of controls,substantive tests of transactions,and tests of details of balances lies in what the auditor wants to measure.Explain what each type of test attempts to measure.

Accepted Answer

Tests of controls focus on testing the o

Question 8

When defining the population and the sampling unit for tests of details of balances,

Accepted Answer

A) the population is defined as all of the transactions in the journal for the period. 
B) the sampling unit must be the same for all balance sheet accounts. 
C) if sampling for completeness,the sampling unit will be customers with zero balances. 
D) if sampling for completeness,the sampling unit will be the items making up the recorded population. 
A) the population is defined as all of the transactions in the journal for the period. 
B) the sampling unit must be the same for all balance sheet accounts. 
C) if sampling for completeness,the sampling unit will be customers with zero balances. 
D) if sampling for completeness,the sampling unit will be the items making up the recorded population.

Question 9

Using statistical sampling to assist in verifying the year-end accounts payable balance,an auditor has accumulated the following data  
Projecting the misstatement to the population,the auditor's estimate of year-end accounts payable balance would be:

Accepted Answer

A) $5,050,000. 
B) $5,125,000. 
C) $6,000,000. 
D) $6,150,000. 
A) $5,050,000. 
B) $5,125,000. 
C) $6,000,000. 
D) $6,150,000.

Question 10

When using difference estimation,the precision interval is calculated by a statistical formula.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) accept the population as fairly stated or to require further action. 
B) determine sampling error and calculate the estimated total population error. 
C) project the point estimate. 
D) determine the error in each sample. 
A) accept the population as fairly stated or to require further action. 
B) determine sampling error and calculate the estimated total population error. 
C) project the point estimate. 
D) determine the error in each sample.

Question 12

One of the steps involved in planning the sample for the tests of details of balances is to

Accepted Answer

A) select the sample. 
B) perform the audit procedures. 
C) define a misstatement. 
D) analyze the misstatements. 
A) select the sample. 
B) perform the audit procedures. 
C) define a misstatement. 
D) analyze the misstatements.

Question 13

To determine the sampling interval,the population is divided by the confidence factor.

Accepted Answer

A) True 
 B)False

Question 14

If the population is not considered acceptable,one step the auditor is likely to take is to

Accepted Answer

A) retest all internal controls. 
B) ask the client to adjust the account balance. 
C) test the entire population. 
D) decrease inherent risk. 
A) retest all internal controls. 
B) ask the client to adjust the account balance. 
C) test the entire population. 
D) decrease inherent risk.

Question 15

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the True population misstatement exceeds a tolerable amount.Which of the following factors should be considered by the auditor in making this assessment?

Accepted Answer

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

Question 16

The purpose of stratification is to permit auditors to emphasize certain aspects of a population and deemphasize others.

Accepted Answer

A) True 
 B)False

Question 17

To calculate the sample size in monetary unit sampling,

Accepted Answer

A) the confidence factor is multiplied by the tolerable misstatement as a percentage of the population value. 
B) the confidence factor is divided by the tolerable misstatement as a percentage of the population value. 
C) the tolerable misstatement is divided by the population recorded value. 
D) the tolerable misstatement is multiplied by the population recorded value. 
A) the confidence factor is multiplied by the tolerable misstatement as a percentage of the population value. 
B) the confidence factor is divided by the tolerable misstatement as a percentage of the population value. 
C) the tolerable misstatement is divided by the population recorded value. 
D) the tolerable misstatement is multiplied by the population recorded value.

Question 18

When errors are found in a sample,auditors in practice generally make the assumption

Accepted Answer

A) that the population errors cannot be determined. 
B) that the population errors are larger than the sample errors. 
C) that the population errors are smaller than the sample errors. 
D) that the actual sample errors are representative of the population errors. 
A) that the population errors cannot be determined. 
B) that the population errors are larger than the sample errors. 
C) that the population errors are smaller than the sample errors. 
D) that the actual sample errors are representative of the population errors.

Question 19

As the amount of misstatements expected in the population approaches tolerable misstatement,the planned sample size will

Accepted Answer

A) decrease. 
B) increase. 
C) vary based on characteristics of the population. 
D) be unaffected. 
A) decrease. 
B) increase. 
C) vary based on characteristics of the population. 
D) be unaffected.

Question 20

Identify each of the seven factors that influence sample size for nonstatistical tests of details of balances,and state whether each factor is directly or inversely related to sample size.

Accepted Answer

Factors that influence sample size for n

Exam 17: Audit Sampling for Tests of Details of Balances

Which of the following is a correct statement?

The method used to measure the estimated total misstatement amount in a population when there is both a recorded value and an audited value for each item in the sample is

In stratified sampling,a maximum of four stratum can be used.

Calculating the sample size using monetary unit sampling depends on which of the following factors?

An auditor using nonstatistical sampling cannot formally measure sampling error.

Which of the following item(s)are needed to determine the sample size using MUS?

The most important difference among tests of controls,substantive tests of transactions,and tests of details of balances lies in what the auditor wants to measure.Explain what each type of test attempts to measure.

When defining the population and the sampling unit for tests of details of balances,

Using statistical sampling to assist in verifying the year-end accounts payable balance,an auditor has accumulated the following data Projecting the misstatement to the population,the auditor's estimate of year-end accounts payable balance would be:

When using difference estimation,the precision interval is calculated by a statistical formula.

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

One of the steps involved in planning the sample for the tests of details of balances is to

To determine the sampling interval,the population is divided by the confidence factor.

If the population is not considered acceptable,one step the auditor is likely to take is to

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the True population misstatement exceeds a tolerable amount.Which of the following factors should be considered by the auditor in making this assessment?

The purpose of stratification is to permit auditors to emphasize certain aspects of a population and deemphasize others.

To calculate the sample size in monetary unit sampling,

When errors are found in a sample,auditors in practice generally make the assumption

As the amount of misstatements expected in the population approaches tolerable misstatement,the planned sample size will

Identify each of the seven factors that influence sample size for nonstatistical tests of details of balances,and state whether each factor is directly or inversely related to sample size.

The Demand for Audit and Other Assurance Services

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Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

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Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

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

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

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

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Completing the Audit

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