Question 1

Which of the following statements regarding block sampling is least likely to be true?

Accepted Answer

A)  Block sampling is the selection of several items in sequence. 
B)  It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used. 
C)  Only one block should be selected to increase the probability of a representative sample. 
D)  Once the first item in the block is selected, the remainder of the block is chosen automatically. 
A)  Block sampling is the selection of several items in sequence. 
B)  It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used. 
C)  Only one block should be selected to increase the probability of a representative sample. 
D)  Once the first item in the block is selected, the remainder of the block is chosen automatically.

Question 2

Auditors most often generate random numbers by using one of three computer sample selection techniques. Name these three computer sample selection techniques.

Accepted Answer

Three types of sample selectio

Question 3

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 4

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 5

Which of the following is the exception rate that the auditor expects to find before testing?

Accepted Answer

A)  sample exception rate 
B)  estimated population exception rate 
C)  computed exception rate 
D)  tolerable exception rate 
A)  sample exception rate 
B)  estimated population exception rate 
C)  computed exception rate 
D)  tolerable exception rate

Question 6

You are determining the appropriate sample size to test accounts receivable. What three factors are the most important to consider?

Accepted Answer

1. tolerable exception rate (T

Question 7

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

Accepted Answer

A) True 
 B)False

Question 8

Whenever auditors use sampling, they risk making incorrect conclusions about the population. The risk that the auditor concludes that controls are more effective than they actually are is known as the

Accepted Answer

A)  risk of overreliance. 
B)  risk of underreliance. 
C)  risk that the sample is not representative of the population. 
D)  risk that the sample conclusions cannot be useful because of nonprobability sampling. 
A)  risk of overreliance. 
B)  risk of underreliance. 
C)  risk that the sample is not representative of the population. 
D)  risk that the sample conclusions cannot be useful because of nonprobability sampling.

Question 9

Which of the following is one of the main differences between attributes sampling and nonstatistical sampling?

Accepted Answer

A)  the number of steps involved 
B)  the calculation of the initial sample sizes 
C)  determining the objectives of the audit test 
D)  defining the population 
A)  the number of steps involved 
B)  the calculation of the initial sample sizes 
C)  determining the objectives of the audit test 
D)  defining the population

Question 10

When defining the population,

Accepted Answer

A)  it may be necessary to define separate populations for different audit procedures. 
B)  the auditor may generalize only about the population that has been sampled. 
C)  auditors can define the population to include any items they want. 
D)  all of the above 
A)  it may be necessary to define separate populations for different audit procedures. 
B)  the auditor may generalize only about the population that has been sampled. 
C)  auditors can define the population to include any items they want. 
D)  all of the above

Question 11

Assume an important control is shipping documents being attached to invoices. An effective audit procedure for detecting exceptions to this control would be to examine a sample of shipping documents and determining whether each is attached to a duplicate sales invoice.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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

Accepted Answer

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

Question 14

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 15

An advantage of using statistical sampling techniques is that such techniques

Accepted Answer

A)  quantify sampling 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)  quantify sampling 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 16

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

Accepted Answer

A) True 
 B)False

Question 17

A principal advantage of statistical methods of attributes sampling over nonstatistical methods is that they provide a quantifiable basis for establishing the

Accepted Answer

A)  risk of assessing control risk too low. 
B)  tolerable exception rate. 
C)  expected population exception rate. 
D)  sample size. 
A)  risk of assessing control risk too low. 
B)  tolerable exception rate. 
C)  expected population exception rate. 
D)  sample size.

Question 18

Auditors can increase the likelihood of a sample being representative by using professional care in the design of the sampling process, in the selection of the sample, and in the evaluation of the sample results.

Accepted Answer

A) True 
 B)False

Question 19

When planning the audit sample,

Accepted Answer

A)  one objective of the tests of controls is to test the effectiveness of the controls. 
B)  audit sampling applies to analytical procedures. 
C)  audit sampling generally applies to automated controls. 
D)  the auditor must generalize from the sample to the population. 
A)  one objective of the tests of controls is to test the effectiveness of the controls. 
B)  audit sampling applies to analytical procedures. 
C)  audit sampling generally applies to automated controls. 
D)  the auditor must generalize from the sample to the population.

Question 20

When the estimated population exception rate exceeds the sample exception rate, the auditor can conclude that the sample results do not support the preliminary assessed control risk.

Accepted Answer

A) True 
 B)False

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

Which of the following statements regarding block sampling is least likely to be true?

Auditors most often generate random numbers by using one of three computer sample selection techniques. Name these three computer sample selection techniques.

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

Which of the following results in a larger sample size?

Which of the following is the exception rate that the auditor expects to find before testing?

You are determining the appropriate sample size to test accounts receivable. What three factors are the most important to consider?

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

Whenever auditors use sampling, they risk making incorrect conclusions about the population. The risk that the auditor concludes that controls are more effective than they actually are is known as the

Which of the following is one of the main differences between attributes sampling and nonstatistical sampling?

When defining the population,

Assume an important control is shipping documents being attached to invoices. An effective audit procedure for detecting exceptions to this control would be to examine a sample of shipping documents and determining whether each is attached to a duplicate sales invoice.

Simple random sampling

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

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

An advantage of using statistical sampling techniques is that such techniques

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

A principal advantage of statistical methods of attributes sampling over nonstatistical methods is that they provide a quantifiable basis for establishing the

Auditors can increase the likelihood of a sample being representative by using professional care in the design of the sampling process, in the selection of the sample, and in the evaluation of the sample results.

When planning the audit sample,

When the estimated population exception rate exceeds the sample exception rate, the auditor can conclude that the sample results do not support the preliminary assessed control risk.

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 Materiality

Assessing the Risk of Material Misstatement

Fraud Auditing

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

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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