Question 1

Discuss what is meant by "sampling risk" and "nonsampling risk."

Accepted Answer

Sampling risk is the risk that an audito

Question 2

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 3

Auditors often use the ________ to determine the estimated population exception rate.

Accepted Answer

A) current year's audit results 
B) tolerable exception rate 
C) preceeding year's audit results 
D) estimated computed by management 
A) current year's audit results 
B) tolerable exception rate 
C) preceeding year's audit results 
D) estimated computed by management

Question 4

The sample exception rate equals:

Accepted Answer

A) the number of exceptions in the population divided by the sample size. 
B) the number of items in the population multiplied by the number of exceptions in the sample. 
C) the number of exceptions in the sample divided by the sample size. 
D) the number of exceptions in the population divided by the population size. 
A) the number of exceptions in the population divided by the sample size. 
B) the number of items in the population multiplied by the number of exceptions in the sample. 
C) the number of exceptions in the sample divided by the sample size. 
D) the number of exceptions in the population divided by the population size.

Question 5

Nonprobabilistic selection methods are not based on mathematical probabilities; therefore:

Accepted Answer

A) the extent to which a sample is representative of the population may be difficult to determine. 
B) they are discouraged by the AICPA. 
C) they are not allowed by the Statements on Auditing Standards. 
D) they are not as effective as statistical sampling. 
A) the extent to which a sample is representative of the population may be difficult to determine. 
B) they are discouraged by the AICPA. 
C) they are not allowed by the Statements on Auditing Standards. 
D) they are not as effective as statistical sampling.

Question 6

Which of the following represents the best description of the tolerable exception?

Accepted Answer

A) The highest exception rate the auditor will permit in the control being tested and still conclude it is operating effectively 
B) The highest exception rate the auditor expects to find in the population 
C) The number of exceptions found in the sample divided by the sample size 
D) The highest estimated exception rate in a population at a given EPER 
A) The highest exception rate the auditor will permit in the control being tested and still conclude it is operating effectively 
B) The highest exception rate the auditor expects to find in the population 
C) The number of exceptions found in the sample divided by the sample size 
D) The highest estimated exception rate in a population at a given EPER

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

It is virtually impossible to reduce sampling risk to zero.

Accepted Answer

A) True 
 B)False

Question 10

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.In the planning section there are 9 steps, beginning with "state the audit objective" and ending with "determine the initial sample size." Name and discuss at least 3 steps between the ones listed above.

Accepted Answer

The steps that comprise the "plan the sa

Question 11

The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is:

Accepted Answer

A) the upper exception rate. 
B) estimated population exception rate. 
C) the computed upper exception rate. 
D) the tolerable exception rate. 
A) the upper exception rate. 
B) estimated population exception rate. 
C) the computed upper exception rate. 
D) the tolerable exception rate.

Question 12

Nonprobabilistic sampling methods are not based on mathematical probabilities and therefore the representativeness of the sample may be difficult to determine.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The most serious shortcoming of the haphazard sample selection method is:

Accepted Answer

A) it is not subject to statistical sampling methods. 
B) it is time consuming to use. 
C) it is costly to use. 
D) it is difficult to remain completely unbiased in the selection. 
A) it is not subject to statistical sampling methods. 
B) it is time consuming to use. 
C) it is costly to use. 
D) it is difficult to remain completely unbiased in the selection.

Question 15

Which of the following results in a larger sample size?

Accepted Answer

A) Decrease the estimated population exception rate and decrease the tolerable exception rate. 
B) Increase the estimated population exception rate and decrease the tolerable exception rate. 
C) Decrease the estimated population exception rate and increase the tolerable exception rate. 
D) Increase the estimated population exception rate and increase the tolerable exception rate. 
A) Decrease the estimated population exception rate and decrease the tolerable exception rate. 
B) Increase the estimated population exception rate and decrease the tolerable exception rate. 
C) Decrease the estimated population exception rate and increase the tolerable exception rate. 
D) Increase the estimated population exception rate and increase the tolerable exception rate.

Question 16

The upper limit of the interval estimate is also known as the confidence interval.

Accepted Answer

A) True 
 B)False

Question 17

One of the causes of nonsampling risk is:

Accepted Answer

A) improper supervision and instruction of the client's employees. 
B) ineffective audit procedures. 
C) inadequate sample size. 
D) exceptions being found in the sample. 
A) improper supervision and instruction of the client's employees. 
B) ineffective audit procedures. 
C) inadequate sample size. 
D) exceptions being found in the sample.

Question 18

Which of the following must be set prior to testing a sample?

Accepted Answer

A) Sample exception rate 
B) Achieved upper precision limit 
C) Computed exception rate 
D) Tolerable exception rate 
A) Sample exception rate 
B) Achieved upper precision limit 
C) Computed exception rate 
D) Tolerable exception rate

Question 19

Which of the following is a correct statement regarding block sampling?

Accepted Answer

A) It is acceptable to use block sampling only if a reasonable number of blocks are used. 
B) Block sampling uses sampling with replacement. 
C) Block sampling is a probabilistic sampling method. 
D) There is considerable cost and time involved when block sampling is used. 
A) It is acceptable to use block sampling only if a reasonable number of blocks are used. 
B) Block sampling uses sampling with replacement. 
C) Block sampling is a probabilistic sampling method. 
D) There is considerable cost and time involved when block sampling is used.

Question 20

Which of the following methods of sample selection is appropriately used when selecting a random sample?

Accepted Answer

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

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

Discuss what is meant by "sampling risk" and "nonsampling risk."

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

Auditors often use the ________ to determine the estimated population exception rate.

The sample exception rate equals:

Nonprobabilistic selection methods are not based on mathematical probabilities; therefore:

Which of the following represents the best description of the tolerable exception?

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

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

It is virtually impossible to reduce sampling risk to zero.

The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is:

Nonprobabilistic sampling methods are not based on mathematical probabilities and therefore the representativeness of the sample may be difficult to determine.

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?

The most serious shortcoming of the haphazard sample selection method is:

Which of the following results in a larger sample size?

The upper limit of the interval estimate is also known as the confidence interval.

One of the causes of nonsampling risk is:

Which of the following must be set prior to testing a sample?

Which of the following is a correct statement regarding block sampling?

Which of the following methods of sample selection is appropriately used when selecting a random sample?

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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