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

Describe the differences between statistical and nonstatistical sampling in terms of (1)the sample selection methods used, and (2)quantification of sampling risk.

If the result obtained from a particular sample for control and substantive tests of transactions is critical to the formation of an audit opinion, which of the following is the most important to the auditor in concluding of the appropriateness and sufficiency of evidence gathered?

The tolerable exception rate is the rate that the auditor will permit in the population and still be willing to conclude a control is effective.

Statistical sampling eliminates any professional judgment for the auditor.

Which of the following is most correct when using audit sampling for exception rates?

Which of the following statements is not correct regarding probabilistic and nonprobabilistic sample selection?

Which of the following is not a term related to evaluating results in audit sampling until after a sample is tested and evaluated?

When deciding the acceptability of the population:

The relationship of tolerable exception rate (TER)to sample size is:

In testing controls, an overreliance on internal controls that reduces substantive tests and increases the likelihood of not detecting a material misstatement occurs because:

When choosing the appropriate acceptable risk of overreliance, the auditor needs to:

Acceptable risk of overreliance is the risk that the auditor is willing to take in accepting a control as effective when the true population exception rate is greater than the estimated population exception rate.

Which of the following statements best expresses the impact that the performance of audit procedures has on statistical vs.nonstatistical sampling?

The acceptable risk of overreliance:

In the evaluation of the results of an attributes sample, the fact that the exception rate in the sample was 2% rather than the estimated population exception rate of 4% would cause the computed upper exception rate to:

What types of exceptions are auditors most concerned with when evaluating populations of accounting data?

Place the following steps in their proper order: 1.Analyze exceptions 2)Select the sample 3)Define attributes and exception conditions 4)State the objectives of the audit test 5)Specify the tolerable exception rate

If the auditor concludes that the CUER is 5% at a 8% sampling risk, this means that the exception rate in the population is no greater than 5% with an 8% risk of the exception rate exceeding 5%.

When the auditor goes through a population and selects items using nonprobabilistic selection methods, without regard to their size, source, or other distinguishing characteristics, it is called:

Attributes sampling is based on the ________ distribution, in which each possible sample in the population has one of two possible values, such as yes or no.