Question 1

The difference between the tolerable exception rate and the estimated population exception rate is called:

Accepted Answer

A) accuracy of the initial sample estimate. 
B) inflation factor of the initial sample estimate. 
C) precision of the initial sample estimate. 
D) reliability of the initial sample estimate. 
A) accuracy of the initial sample estimate. 
B) inflation factor of the initial sample estimate. 
C) precision of the initial sample estimate. 
D) reliability of the initial sample estimate. C

Question 2

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. A

Question 3

Sampling risk may be controlled by:

Accepted Answer

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

Question 4

Which of the following statements is most correct with respect to the evaluation of nonprobabilistic sample results?

Accepted Answer

A) It is acceptable to make nonprobabilistic evaluations only when probabilistic sample selection is used. 
B) It is acceptable to make nonprobabilistic evaluations only if the auditor cannot quantify sampling risk. 
C) It is never acceptable to evaluate a nonprobabilistic sample using statistical methods. 
D) All of the above are correct. 
A) It is acceptable to make nonprobabilistic evaluations only when probabilistic sample selection is used. 
B) It is acceptable to make nonprobabilistic evaluations only if the auditor cannot quantify sampling risk. 
C) It is never acceptable to evaluate a nonprobabilistic sample using statistical methods. 
D) All of the above are correct.

Question 5

Which of the following statements is most correct with concerning the quantification of sampling risk?

Accepted Answer

A) Sampling risk cannot be quantified. 
B) Sampling risk can be quantified only when nonprobabilistic selection techniques are used to select the sample. 
C) Sampling risk can be quantified only when probabilistic selection techniques are used to select the sample. 
D) None of the above. 
A) Sampling risk cannot be quantified. 
B) Sampling risk can be quantified only when nonprobabilistic selection techniques are used to select the sample. 
C) Sampling risk can be quantified only when probabilistic selection techniques are used to select the sample. 
D) None of the above.

Question 6

If an auditor judgmentally selects a sample of one hundred items from a population and finds two exceptions, the auditor:

Accepted Answer

A) can conclude that the sample exception rate is 2%. 
B) can conclude that the population exception rate is 2%. 
C) can calculate the highest exception rate expected in the population. 
D) cannot make any conclusions about either the sample or the population. 
A) can conclude that the sample exception rate is 2%. 
B) can conclude that the population exception rate is 2%. 
C) can calculate the highest exception rate expected in the population. 
D) cannot make any conclusions about either the sample or the population.

Question 7

If a particular internal control is not followed by the client exactly 6% of the time, and the auditor's tests of that control find three control violations in a sample of 50, the sample is considered to be representative.

Accepted Answer

A) True 
 B)False

Question 8

For which of the following audit procedures would audit sampling not be appropriate?

Accepted Answer

A) Review sales transactions for large and unusual amounts. 
B) Examine a sample of duplicate sales invoices for credit approval. 
C) Compare the quantity on duplicate sales invoices with the quantity on related shipping documents. 
D) Audit sampling is appropriate for each of the above procedures. 
A) Review sales transactions for large and unusual amounts. 
B) Examine a sample of duplicate sales invoices for credit approval. 
C) Compare the quantity on duplicate sales invoices with the quantity on related shipping documents. 
D) Audit sampling is appropriate for each of the above procedures.

Question 9

A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:

Accepted Answer

A) random sample. 
B) statistical sample. 
C) judgment sample. 
D) representative sample. 
A) random sample. 
B) statistical sample. 
C) judgment sample. 
D) representative sample.

Question 10

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 11

Match between columns
                        Premises: The use of mathematical measurement techniques to calculate formal statistical results and quantify sampling risk.
A non-probabilistic method of sample selection in which items are chosen without regard to their size, source, or other distinguishing characteristics.
A sample in which every possible combination of elements in the population has an equal chance of constituting the sample.
An auditor selects items such that each population item has a known probability of being included in the sample.
A sample whose characteristics are the same as those of the population.
A non-probabilistic method of sample selection in which items are selected in measured sequences.
A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameters.
A statistical, probabilistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic of interest.

Accepted Answer

The Answer of Statistical sampling and Sampling distribution and Non-probabilistic is...

Question 12

Explain the effect on sample size of increasing each of the following: (1)tolerable exception rate, (2)estimated population exception rate, (3)acceptable risk of overreliance, and (4)population size.

Accepted Answer

The tolerable exception rate and accepta

Question 13

When the auditor decides to select less than 100 percent of the population for testing, the auditor is said to use:

Accepted Answer

A) audit sampling. 
B) representative sampling. 
C) poor judgment. 
D) estimation sampling. 
A) audit sampling. 
B) representative sampling. 
C) poor judgment. 
D) estimation sampling.

Question 14

Briefly explain why auditors utilize audit sampling.

Accepted Answer

Auditors use sampling techniques primari

Question 15

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.

Question 16

In using audit sampling for exception rates:

Accepted Answer

A) the auditor wants to know the most the exception rate is likely to be. 
B) sampling error is the likelihood that the auditor will miss a monetary misstatement. 
C) the upper limit of the interval estimate is known as the sampling risk. 
D) CUER cannot be considered in the context of specific audit objectives. 
A) the auditor wants to know the most the exception rate is likely to be. 
B) sampling error is the likelihood that the auditor will miss a monetary misstatement. 
C) the upper limit of the interval estimate is known as the sampling risk. 
D) CUER cannot be considered in the context of specific audit objectives.

Question 17

Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.

Accepted Answer

The two causes of nonsampling risk are (

Question 18

There is a(n)________ relationship between acceptable risk of overreliance and planned sample size.

Accepted Answer

A) direct. 
B) inverse. 
C) proportional. 
D) exponential. 
A) direct. 
B) inverse. 
C) proportional. 
D) exponential.

Question 19

The only way to know with certainty whether a sample is representative is to subsequently audit the entire population.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?

Accepted Answer

A) Sampling risk 
B) Nonsampling risk 
C) Audit risk 
D) Detection risk 
A) Sampling risk 
B) Nonsampling risk 
C) Audit risk 
D) Detection risk

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

The difference between the tolerable exception rate and the estimated population exception rate is called:

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

Sampling risk may be controlled by:

Which of the following statements is most correct with respect to the evaluation of nonprobabilistic sample results?

Which of the following statements is most correct with concerning the quantification of sampling risk?

If an auditor judgmentally selects a sample of one hundred items from a population and finds two exceptions, the auditor:

If a particular internal control is not followed by the client exactly 6% of the time, and the auditor's tests of that control find three control violations in a sample of 50, the sample is considered to be representative.

For which of the following audit procedures would audit sampling not be appropriate?

A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:

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:

Explain the effect on sample size of increasing each of the following: (1)tolerable exception rate, (2)estimated population exception rate, (3)acceptable risk of overreliance, and (4)population size.

When the auditor decides to select less than 100 percent of the population for testing, the auditor is said to use:

Briefly explain why auditors utilize audit sampling.

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

In using audit sampling for exception rates:

Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.

There is a(n)________ relationship between acceptable risk of overreliance and planned sample size.

The only way to know with certainty whether a sample is representative is to subsequently audit the entire population.

Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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