Exam 18: Attributes Sampling

Why is the auditor more concerned with the risk of overreliance than the risk of underreliance?

The auditor tested a sample of recorded sales invoices for evidence of credit approval.Based on the results of the sample,the auditor concluded that there was a satisfactory rate of approvals.Unknown to the auditor,credit approvals in the population were not satisfactory.This would be an example of

The audit team is planning to examine a sample of control policies and procedures.Assume that,based on the intended degree of reliance on internal control,the audit team wishes to control the risk of overreliance to 5% and establishes a tolerable deviation rate of 8%.Based on past audits,the audit team would normally estimate the expected population deviation rate at 2%; however,because of improvements in the client's internal control,they now feel that a rate of 1.25% is appropriate.Which of the following is not true with respect to the impact of the reduction in the expected population deviation rate on sample size?

To statistically evaluate an attributes sampling application,the auditor would not need to know

If the auditor were interested in ensuring that all sales have been recorded,the population would be defined as

If an auditor tested 50 transactions and found two deviations from an important control activity,the auditor could conclude that

Indicate whether each of the following represents an application of a statistical (S)or nonstatistical (N)sampling application. ____ 1.In order to begin testing the occurrence assertion for Bear's sales invoices,Lion determined the expected population deviation rate to be 1.25%,the tolerable rate of deviation to be 4% and the risk of overreliance to be 5%. ____ 2.Lion determined the tolerable rate of deviation to be low while testing controls concerning loan agreements.The audit team considered the sample size provided by the AICPA tables but decided that more loans needed to be tested to accurately evaluate the population. ____ 3.To test the accuracy of Bear's accounts receivable,Lion ordered the accounts into an aging list and selected the last fifty items for examination. ____ 4.A list of pre-numbered purchase orders was used to test the completeness assertion.Lion decided to randomly select items from the list for examination by identifying them from a perusal of files. ____ 5.Lion suspected the existence of fraud in Bear's payroll department.As a result,Lion set the expected population deviation rate at zero and used quantitative measures to ensure that sampling risk was controlled to acceptable levels. ____ 6.Lion used professional judgment to estimate the allowance for sampling risk to determine the likely rate of deviation in the population when testing the cutoff of Bear's sales invoices.

The purpose of tests of controls is to determine that

What is an auditor's evaluation of a statistical sample for attributes when a test of 100 documents results in 4 deviations if the tolerable rate of deviation is 5%,the expected population deviation rate is 3%,and the allowance for sampling risk is 2%?

The procedures for statistical evaluation of tests of controls with the AICPA Sample Evaluation Tables would not include the following step

Which of the following is not true with regard to the relationship among control risk,the risk of overreliance,and the tolerable rate of deviation?

Carson,CPA,judged that his test of controls of the company's 10,000 sales transactions should be based on a risk of overreliance of 10%,a tolerable rate of deviation of 8%,and an expected population deviation rate of 3.75%.Using the AICPA Sample Size tables,which of the following modifications would not affect Carson's sample size?

When selecting a sample of items to perform a test of controls,all of the following should be true of a representative sample,except

Which of the following does not have a direct relationship with sample size?

Assume that the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 1%,and desired to control the risk of overreliance to 5%.What is the appropriate sample size in this situation?

An auditor is testing control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers.If a random number matches the number of a voided voucher,that voucher ordinarily should be replaced by another voucher in the random sample if the voucher

Which of the following components of the audit risk model is most closely associated with attributes sampling?

In performing tests of controls over authorization of cash disbursements,which of the following statistical sampling methods would be most appropriate?

Williams,CPA,is using attributes sampling to test controls related to the completeness of purchasing transactions.Williams decided to select all purchase orders from September for testing.This is an example of

An auditor is examining an important internal control in his audit of ABC Company.Because the account balance affected by this control is highly susceptible to fraud,she will reject the sample if even one deviation is discovered.What type of sampling plan should she use?