Exam 19: Variables Sampling

Which of the following components of the upper limit on misstatements is determined by multiplying the sampling interval by the confidence factor for the acceptable risk of incorrect acceptance?

Indicate how each of the following conditions affect sample size in a monetary unit sampling application by using the letters I (increase),D (decrease),or N (no effect),assuming that all other factors are held constant. ___ 1.An increase in the expected misstatement from $5,000 to $10,000. ___ 2.A decrease in the population size from $1,500,000 to $1,350,000. ___ 3.An increase in the tolerable misstatement from $25,000 to $35,000. ___ 4.An increase in the risk of incorrect rejection from 5 percent to 10 percent. ___ 5.A decrease in the risk of incorrect acceptance from 5 percent to 1 percent.

The sampling method used to examine a population when the auditor wants to estimate a continuous amount (or value)of the population is

Which of the following factors that affect sample size can be determined by considering the recorded account balance of the account or class of transactions as well as the relationship between the recorded account balance or class of transactions with important financial statement subtotals?

Rome,CPA is conducting a classical variables sampling application on a client's accounts receivable recorded at $3,000,000.These receivables are comprised of 5,000 customer accounts.Assume that Rome identified an acceptable level of the risk of incorrect acceptance of 5%,determined a sample size of 100,and confirmed the accounts with the client's customers.Rome's substantive procedures indicated that the average audited value was $590 per account.

Which of the following is not an acceptable course of action the audit team can choose when sample evidence suggests that the account balance is materially misstated?

Below are descriptions of how key parameters are determined in a monetary unit sampling application.Match each description of a situation with the related term.Each parameter is associated with only one description.

Which of the following factors is most likely established based on the results of prior audit examinations?

Which of the following is found by dividing the amount of misstatement noted in a logical unit by the recorded amount of that logical unit?

Ranger,CPA used nonstatistical sampling to examine the accounts receivable balances of Cowboy Inc.,He audited a sample of 150 items and found an audited value of $5,000 less than the recorded value of $25,000.The entire account balance contained 2,000 items and had a total recorded value of $350,000.Using nonstatistical methods and assuming that Ranger used the ratio of audited value to recorded value to estimate the account balance,the estimated total account balance is

The upper limit on misstatements is

Roberts,CPA,decided to use monetary unit sampling in the audit of a client's accounts receivable balance.The recorded amount of the accounts receivable control account totaled $2,000,000 and consisted of approximately 5,000 accounts.Roberts established a tolerable misstatement of $100,000,a risk of incorrect acceptance of 5%,and an expected misstatement of $10,000. a.Calculate the sample size. b.Calculate the sampling interval.

Auditors are evaluating an account with a recorded balance of $600,000 using classical variables sampling.Based on an allowable risk of incorrect acceptance of 5%,the auditors have determined the following: • Estimated account balance = $680,000 • Precision = $20,000 • Tolerable misstatement = $50,000 Which of the following best describes the auditors' decision and rationale for that decision?

Holding other factors constant in a classical variables sampling application,an increase in which of these factors will cause sample size to increase?

Which of the following is not a correct relationship between a factor and sample size in a monetary unit sampling application?

Why is the auditor more concerned with controlling the exposure to the risk of incorrect acceptance than with the risk of incorrect rejection?

Which of the following set of conditions would provide the auditor with the smallest sample size under monetary unit sampling (RIA = risk of incorrect acceptance,EM = expected misstatement,TM = tolerable misstatement,PS = population size)?

All other factors being equal,as the risk of incorrect acceptance and tolerable misstatement increase,the sample size will

A number of factors influence the sample size for a variables sampling application.All other factors held constant,which of the following would lead to a larger sample size?

Allister is auditing a client's accounts balance recorded at $500,000 using monetary unit sampling and determined a sample size of 100 items.The following two misstatements were identified as a result of the substantive tests: Confidence factors for a 5% risk of incorrect acceptance are shown below: What is the incremental allowance for sampling risk?