Exam 8: Audit Sampling: An Overview and Application to Tests of Controls

A control is deemed to be more important than thought at the time that attributes sampling parameters were set. The auditor is most likely to respond by:

To determine the sample size for a test of controls, an auditor should consider the tolerable deviation rate, the desired confidence level, and the:

Indicate which of the following audit procedures, used as tests of controls, do not involve audit sampling. 1. Observing and evaluating segregation of duties. 2. Testing of whether sales invoices are supported by authorized customer orders and shipping documents. 3. Reviewing entity's procedures for accounting for the numerical sequence of shipping documents. 4. Examining sales orders for proper credit approval. 5. Recomputing the information on copies of sales invoices. 6. Comparing the average days outstanding in accounts receivable with industry averages.

Which of the following factors does an auditor generally need to consider in planning a particular audit sample for a test of controls?

A Type I error is the risk of incorrect acceptance.

For which of the following audit tests would an auditor most likely use attributes sampling?

Confidence level and sampling risk are related to sample size.

As a result of tests of controls, an auditor incorrectly assessed control risk too low and decreased substantive testing. This assessment occurred because the true deviation rate in the population was:

The larger the sample, the lower the confidence level and the lower the sampling risk.

The computed upper deviation rate is:

For a large population of cash disbursement transactions, Smith, CPA is testing controls by using attribute sampling techniques. Anticipating an expected deviation rate of 3 percent, Smith found from a table that the required sample size is 400 with a tolerable deviation rate of 5 percent and a desired confidence level of 95 percent. If Smith anticipated an expected deviation rate of only 2 percent but wanted to maintain the same tolerable deviation rate and confidence level, the sample size would be closest to:

When determining the sample size of accounts receivable to test, what are three factors that are important for you to consider?

Audit sampling is commonly used for which type of audit evidence?

Before performing sampling procedures in an audit of controls, Sue set the tolerable deviation rate at 4.0%. After the procedures, she computes a computed upper deviation rate of 5.4%. What can Sue conclude about the entity's controls?

For attributes sampling, of the three factors that enter into sample size determination, which two factors can the auditor adjust to reflect the importance of the control?

For a particular audit, the sample size for testing controls over the revenue cycle is relatively large. What can you infer about the desired confidence level, the tolerable deviation rate, and the expected population deviation rate?

Jones, CPA, believes the industry-wide deviation rate of client billing errors is 3% and has established a tolerable deviation rate of 5%. In the review of client invoices, Jones should use

Which of the following risks is related to efficiency of testing?

Audit sampling is commonly used to gather confirmation audit evidence.

In which of the following cases would the auditor determine that statistical sampling should not be performed?