Exam 17: Audit Sampling for Tests of Details of Balances

Auditors perform test of controls and substantive tests of transactions for several reasons. Which of the following is not one of those reasons?

Which of the following is a correct statement?

Explain acceptable risk of incorrect acceptance and acceptable risk of incorrect rejection within the context of variables sampling.

As the Acceptable Risk of Incorrect Acceptance (ARIA) decreases, the confidence factors increase.

In estimating the population misstatement, the first step in projecting from the sample to the population is to

The use of monetary unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

If the auditor believes that there will be more than just a few exceptions discovered, and desires an accurate estimate of the dollar value of the exceptions, he or she will use

You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of

When analyzing misstatements, the auditor will determine

Which of the following needs to be considered when the auditor generalizes from the sample to the population?

When using MUS, the projected misstatement is the percentage misstatement times the sampling interval.

If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?

When using nonstatistical sampling, the auditor must subjectively consider whether the true population misstatement exceeds a tolerable amount. This is done by considering five factors. One factor is the difference between the point estimate and tolerable misstatement. State the other four factors the auditor must consider.

When using sampling methods, the auditor is focused on obtaining results in dollar terms.

Auditors should attempt to minimize ARIA and maximize ARIR.

When working with the different variables methods,

There are four steps to generalize from the sample to the population using difference estimation sampling. Identify each of these four steps.

ARIA measures the auditor's desired assurance for an account balance.

Discuss the advantages and disadvantages of monetary unit sampling over other sampling methods.

Acceptable risk of incorrect rejection affects auditors' action only when they conclude that a population is