Exam 18: Attributes Sampling

Which of the following statements is generally correct about the sample size in statistical sampling when testing internal controls?

While selecting a sample of sales invoices for a test of internal controls,the auditor was unable to locate one invoice and classified this invoice as non-deviation.This is an example of

Which of the following is the most likely outcome when the upper limit rate of deviation is less than the tolerable rate of deviation?

As part of the assessment of control risk,the auditor decided to use audit sampling.After specifying the audit objectives,what would the auditor most likely do next?

A sampling plan in which an initial sample is selected and the audit team either draws a final conclusion or selects additional items before drawing a final conclusion is called

Nonsampling risk normally occurs during which step of the sampling process?

The maximum rate of deviation that may exist in the operation of a control policy or procedure before the auditors would reduce reliance on internal control is referred to as

Which of the following is not a judgment or estimate auditors must make when performing attributes sampling?

Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

In performing attributes sampling,the auditor will conclude that the control is functioning as intended if the ______ is less than or equal to ______.

Which of the following statements is true regarding attributes sampling?

In determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized,an auditor should consider the tolerable rate of deviation from the control activity.The auditor should also consider 1.Likely rate of deviations 2)Allowable risk of underreliance.

To determine the appropriate sample size for an attributes sampling application,Williams,CPA,defined the population to be 25,000 sales invoices.Williams then assessed the risk of overreliance to be 10%,the tolerable rate of deviation to be 4%,and the expected population deviation rate to be 2.5%.Using the AICPA Sample Size tables,the appropriate sample size would be

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

Which of the following statements is correct concerning statistical sampling in tests of controls?

Indicate how each of the following conditions affect sample size by using the letters I (increase),D (decrease),or N (no effect).For each condition,hold all other factors constant. ____ 1.An increase in the expected population deviation rate from 2% to 5%. ____ 2.A decrease in the population from 10,000 controls to 5,000 controls. ____ 3.An increase in the tolerable rate of deviation from 3% to 10%. ____ 4.An increase in the risk of underreliance from 5% to 10%. ____ 5.A decrease in the risk of overreliance from 5% to 1%.

What is the general order in which the following steps in attributes sampling are performed? 1 = Define the population 2 = Determine the objective of sampling 3 = Determine the sample size 4 = Select the sample

When the auditor concludes that a control is functioning properly when,in fact,it is not,the auditor has committed the

When examining the client's internal control,what is the relationship of each of the following with sample size?

An auditor wanted to test credit approval on 10,000 sales invoices processed during the year.The auditor designed a statistical sample that would provide a 1% risk of overreliance (99% confidence)that not more than 7% of the sales invoices lacked approval.The auditor estimated from previous experience that about 2.5% of the sales invoices lacked approval.A sample of 200 invoices was examined and 7 of them were lacking approval.The auditor then determined the upper limit rate of deviation to be 8%. In evaluating this sample,the auditor decided to increase the level of the preliminary assessment of control risk because the