Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

In using sampling distribution for attributes, which one of the following must be known to evaluate the sample results?

Accepted Answer

A) Estimated dollar value of the population 
B) Standard exception of the values in the population 
C) Actual exception rate of the attribute in the population 
D) Sample size 
A) Estimated dollar value of the population 
B) Standard exception of the values in the population 
C) Actual exception rate of the attribute in the population 
D) Sample size

Question 3

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 4

Tolerable exception rate (TER)is inversely related to sample size.

Accepted Answer

A) True 
 B)False

Question 5

An advantage of using statistical sampling techniques is that such techniques:

Accepted Answer

A) mathematically measure risk. 
B) eliminate the need for judgmental decisions. 
C) define the values of precision and reliability required to provide audit satisfaction. 
D) have been established in the courts to be superior to judgmental sampling. 
A) mathematically measure risk. 
B) eliminate the need for judgmental decisions. 
C) define the values of precision and reliability required to provide audit satisfaction. 
D) have been established in the courts to be superior to judgmental sampling.

Question 6

In practice, auditors do not know whether a sample is representative, even after all testing is complete.

Accepted Answer

A) True 
 B)False

Question 7

There are 14 steps to attributes sampling, divided into three sections: plan the sample, select the sample and perform the audit procedures, and evaluate the results.Discuss the three steps that comprise the "evaluate the results" section.

Accepted Answer

The steps that comprise the "evaluate th

Question 8

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 9

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 10

What is the key advantage and disadvantage associated with systematic sample selection?
 How must auditors address this disadvantage?

Accepted Answer

The key advantage is its ease of use.Gen

Question 11

Simple random sampling:

Accepted Answer

A) is used when there is a need to emphasize one or more types of population items. 
B) requires both input and output parameters to be set when using a random number generator. 
C) is generally used with replacement sampling. 
D) is a probabilistic sampling method. 
A) is used when there is a need to emphasize one or more types of population items. 
B) requires both input and output parameters to be set when using a random number generator. 
C) is generally used with replacement sampling. 
D) is a probabilistic sampling method.

Question 12

List the two ways auditors can control sampling risk.

Accepted Answer

Auditors can control sampling

Question 13

There are three phases in both statistical and nonstatistical sampling.The first phase is to:

Accepted Answer

A) generate random numbers for the sample. 
B) evaluate the results. 
C) plan the sample. 
D) select the sample. 
A) generate random numbers for the sample. 
B) evaluate the results. 
C) plan the sample. 
D) select the sample.

Question 14

When the SER exceeds the TER, the auditor should decide whether to increase sample size or to revise assessed control risk on the basis of cost versus benefit.

Accepted Answer

A) True 
 B)False

Question 15

An auditor can increase the likelihood that a sample is representative by using care in:

Accepted Answer

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

Question 16

If an auditor does a test in the wrong direction, sampling risk will increase.

Accepted Answer

A) True 
 B)False

Question 17

You are determining the significance of the following: you set a 5% risk of assessing control risk to low and your computation of the upper deviation risk is 7%.What could you conclude?

Accepted Answer

A) There is a 95% chance the deviation rate is the population is less than 5%. 
B) There is a 5% chance the deviation rate in the population is less than 7%. 
C) There is a 95% chance the deviation rate in the population exceeds 95%. 
D) There is a 5% chance the deviation rate in the population exceeds 7%. 
A) There is a 95% chance the deviation rate is the population is less than 5%. 
B) There is a 5% chance the deviation rate in the population is less than 7%. 
C) There is a 95% chance the deviation rate in the population exceeds 95%. 
D) There is a 5% chance the deviation rate in the population exceeds 7%.

Question 18

The advantage of systematic sample selection is that:

Accepted Answer

A) it is easy to use. 
B) there is limited possibility of it being biased. 
C) it is unnecessary to determine if the population is arranged randomly. 
D) it automatically selects items material to the financial statements. 
A) it is easy to use. 
B) there is limited possibility of it being biased. 
C) it is unnecessary to determine if the population is arranged randomly. 
D) it automatically selects items material to the financial statements.

Question 19

Directed sample selection, block sample selection, and haphazard sample selection are three types of probabilistic sample selection methods.

Accepted Answer

A) True 
 B)False

Question 20

Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%.In auditing client invoices Rodgers should use:

Accepted Answer

A) stratified sampling. 
B) classical sampling. 
C) proportional sampling. 
D) attributes sampling. 
A) stratified sampling. 
B) classical sampling. 
C) proportional sampling. 
D) attributes sampling.

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

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

In using sampling distribution for attributes, which one of the following must be known to evaluate the sample results?

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

Tolerable exception rate (TER)is inversely related to sample size.

An advantage of using statistical sampling techniques is that such techniques:

In practice, auditors do not know whether a sample is representative, even after all testing is complete.

There are 14 steps to attributes sampling, divided into three sections: plan the sample, select the sample and perform the audit procedures, and evaluate the results.Discuss the three steps that comprise the "evaluate the results" section.

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:

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

What is the key advantage and disadvantage associated with systematic sample selection? How must auditors address this disadvantage?

Simple random sampling:

List the two ways auditors can control sampling risk.

There are three phases in both statistical and nonstatistical sampling.The first phase is to:

When the SER exceeds the TER, the auditor should decide whether to increase sample size or to revise assessed control risk on the basis of cost versus benefit.

An auditor can increase the likelihood that a sample is representative by using care in:

If an auditor does a test in the wrong direction, sampling risk will increase.

You are determining the significance of the following: you set a 5% risk of assessing control risk to low and your computation of the upper deviation risk is 7%.What could you conclude?

The advantage of systematic sample selection is that:

Directed sample selection, block sample selection, and haphazard sample selection are three types of probabilistic sample selection methods.

Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%.In auditing client invoices Rodgers should use:

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

Filters