Question 1

The statistical methods used to evaluate monetary unit samples

Accepted Answer

A)  neither exclude nor include units twice. 
B)  may permit the inclusion of a unit in the sample more than once. 
C)  do not permit a unit to be included in the sample more than once. 
D)  ignore the possibility that a unit may be included in a sample more than once. 
A)  neither exclude nor include units twice. 
B)  may permit the inclusion of a unit in the sample more than once. 
C)  do not permit a unit to be included in the sample more than once. 
D)  ignore the possibility that a unit may be included in a sample more than once. B

Question 2

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the true population misstatement exceeds a tolerable amount. Which of the following factors should be considered by the auditor in making this assessment?

Accepted Answer

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

Question 3

Which of the following sampling plans would be designed to estimate a numerical measurement of a population, such as a dollar value?

Accepted Answer

A)  numerical sampling 
B)  discovery sampling 
C)  attributes sampling 
D)  variables sampling 
A)  numerical sampling 
B)  discovery sampling 
C)  attributes sampling 
D)  variables sampling D

Question 4

PPS samples can be obtained in an efficient manner using all but which of the following?

Accepted Answer

A)  hand selection by the auditor 
B)  computer software 
C)  random number tables 
D)  systematic sampling techniques 
A)  hand selection by the auditor 
B)  computer software 
C)  random number tables 
D)  systematic sampling techniques

Question 5

To calculate the sample size using difference estimation sampling, it is not necessary for the auditors to have an advance population standard deviation estimate.

Accepted Answer

A) True 
 B)False

Question 6

Auditors can state the conclusions drawn from a confidence interval using statistical inference in different ways.

Accepted Answer

A) True 
 B)False

Question 7

The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is

Accepted Answer

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

Question 8

An auditor is confirming a population of accounts receivable for monetary correctness. The population totals $2,000,000 and a sample of 200 confirmations is obtained. Upon audit, no misstatements are uncovered in the sample. Assuming an ARIA of 10%, the confidence factor would be 2.31. Applied to a sampling interval of $10,000, the upper misstatement bound is calculated as

Accepted Answer

A)  $462. 
B)  $4,329. 
C)  $23,100. 
D)  $865,801. 
A)  $462. 
B)  $4,329. 
C)  $23,100. 
D)  $865,801.

Question 9

Explain the decision rule used in monetary unit sampling to determine whether the population is acceptable.

Accepted Answer

The results are considered acceptable if

Question 10

To calculate the sample size in monetary unit sampling,

Accepted Answer

A)  the confidence factor is multiplied by the tolerable misstatement as a percentage of the population value. 
B)  the confidence factor is divided by the tolerable misstatement as a percentage of the population value. 
C)  the tolerable misstatement is divided by the population recorded value. 
D)  the tolerable misstatement is multiplied by the population recorded value. 
A)  the confidence factor is multiplied by the tolerable misstatement as a percentage of the population value. 
B)  the confidence factor is divided by the tolerable misstatement as a percentage of the population value. 
C)  the tolerable misstatement is divided by the population recorded value. 
D)  the tolerable misstatement is multiplied by the population recorded value.

Question 11

The auditor must do misstatement analysis to decide whether any modification of the audit risk model is needed.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would lead to a larger sample size?

Accepted Answer

A)  low inherent risk 
B)  low control risk 
C)  larger tolerable misstatement 
D)  unsatisfactory results in other related substantive procedures 
A)  low inherent risk 
B)  low control risk 
C)  larger tolerable misstatement 
D)  unsatisfactory results in other related substantive procedures

Question 13

Both sampling and nonsampling risks are associated with

Accepted Answer

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

Question 14

Factors considered by an auditor to determine the possibility that the true population misstatement exceeds a tolerable amount in a nonstatistical sample include all of the following except for

Accepted Answer

A)  the extent to which items in the population have been audited 100%. 
B)  the difference between the point estimate and acceptable control risk. 
C)  whether misstatements tend to be offsetting or in only one direction. 
D)  the amounts of individual misstatements. 
A)  the extent to which items in the population have been audited 100%. 
B)  the difference between the point estimate and acceptable control risk. 
C)  whether misstatements tend to be offsetting or in only one direction. 
D)  the amounts of individual misstatements.

Question 15

An auditor using nonstatistical sampling cannot formally measure sampling error.

Accepted Answer

A) True 
 B)False

Question 16

When making statistical inferences, the auditor must remember that

Accepted Answer

A)  the true population value must always be known. 
B)  auditors can state the conclusions drawn from a confidence interval in different ways. 
C)  there can be no possibility that the sample is not sufficiently representative of the population. 
D)  the knowledge of sampling distributions does not help the auditors to draw statistical conclusions. 
A)  the true population value must always be known. 
B)  auditors can state the conclusions drawn from a confidence interval in different ways. 
C)  there can be no possibility that the sample is not sufficiently representative of the population. 
D)  the knowledge of sampling distributions does not help the auditors to draw statistical conclusions.

Question 17

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the

Accepted Answer

A)  sample mean. 
B)  standard deviation. 
C)  standard error of the sample mean. 
D)  estimated population total minus the actual population. 
A)  sample mean. 
B)  standard deviation. 
C)  standard error of the sample mean. 
D)  estimated population total minus the actual population.

Question 18

The auditor may be able to use computer software to test the accuracy of each customer's account balance by taking each customer's beginning balance, adding sales made on account, subtracting payments received, and adding/subtracting other account adjustments to calculate each customer's ending balance.

Accepted Answer

A) True 
 B)False

Question 19

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

Accepted Answer

A) True 
 B)False

Question 20

When drawing statistical inferences about the population when using variables sampling,

Accepted Answer

A)  a confidence interval cannot be calculated. 
B)  there is always a possibility that the sample is not sufficiently representative of the population to provide a sample mean or standard deviation reasonably close to those of the population. 
C)  the auditor does not know the reliability for the statistical inference process that is used to draw the conclusions. 
D)  all of the above are correct. 
A)  a confidence interval cannot be calculated. 
B)  there is always a possibility that the sample is not sufficiently representative of the population to provide a sample mean or standard deviation reasonably close to those of the population. 
C)  the auditor does not know the reliability for the statistical inference process that is used to draw the conclusions. 
D)  all of the above are correct.

Exam 17: Audit Sampling for Tests of Details of Balances

The statistical methods used to evaluate monetary unit samples

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the true population misstatement exceeds a tolerable amount. Which of the following factors should be considered by the auditor in making this assessment?

Which of the following sampling plans would be designed to estimate a numerical measurement of a population, such as a dollar value?

PPS samples can be obtained in an efficient manner using all but which of the following?

To calculate the sample size using difference estimation sampling, it is not necessary for the auditors to have an advance population standard deviation estimate.

Auditors can state the conclusions drawn from a confidence interval using statistical inference in different ways.

The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is

Explain the decision rule used in monetary unit sampling to determine whether the population is acceptable.

To calculate the sample size in monetary unit sampling,

The auditor must do misstatement analysis to decide whether any modification of the audit risk model is needed.

Which of the following would lead to a larger sample size?

Both sampling and nonsampling risks are associated with

Factors considered by an auditor to determine the possibility that the true population misstatement exceeds a tolerable amount in a nonstatistical sample include all of the following except for

An auditor using nonstatistical sampling cannot formally measure sampling error.

When making statistical inferences, the auditor must remember that

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

When drawing statistical inferences about the population when using variables sampling,

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