Question 1

Which of the following results in a larger sample size?

Accepted Answer

A)  Decrease the estimated population exception rate and decrease the tolerable exception rate. 
B)  Increase the estimated population exception rate and decrease the tolerable exception rate. 
C)  Decrease the estimated population exception rate and increase the tolerable exception rate. 
D)  Increase the estimated population exception rate and increase the tolerable exception rate. 
A)  Decrease the estimated population exception rate and decrease the tolerable exception rate. 
B)  Increase the estimated population exception rate and decrease the tolerable exception rate. 
C)  Decrease the estimated population exception rate and increase the tolerable exception rate. 
D)  Increase the estimated population exception rate and increase the tolerable exception rate.

Question 2

In testing controls,an overreliance on internal controls that reduces substantive tests and increases the likelihood of not detecting a material misstatement occurs because:

Accepted Answer

A) Deviation in the population was less than the sample. 
B)  true deviation in the population was greater than the sample. 
C)  auditor judgment was flawed. 
D)  it is inherent in the audit risk model. 
A) Deviation in the population was less than the sample. 
B)  true deviation in the population was greater than the sample. 
C)  auditor judgment was flawed. 
D)  it is inherent in the audit risk model.

Question 3

The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is:

Accepted Answer

A)  the upper exception rate. 
B)  estimated population exception rate. 
C)  the computed upper exception rate. 
D)  the tolerable exception rate. 
A)  the upper exception rate. 
B)  estimated population exception rate. 
C)  the computed upper exception rate. 
D)  the tolerable exception rate.

Question 4

In nonstatistical sampling,the calculated sampling error is the difference between the tolerable exception rate and the sample exception rate.

Accepted Answer

A) True 
 B)False

Question 5

Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

Accepted Answer

A)  Review sales transactions for large and unreasonable amounts. 
B)  Observe whether the duties of the accounts receivable clerk are separate from handling cash. 
C)  Examine a sample of duplicate sales invoices for credit approval by the credit manager. 
D)  Review the aged schedule of accounts receivable to determine if receivables from officers are included. 
A)  Review sales transactions for large and unreasonable amounts. 
B)  Observe whether the duties of the accounts receivable clerk are separate from handling cash. 
C)  Examine a sample of duplicate sales invoices for credit approval by the credit manager. 
D)  Review the aged schedule of accounts receivable to determine if receivables from officers are included.

Question 6

If the auditor decides to assess control risk at the moderate level in a private company audit,when in previous years the auditor set control risk at the maximum level,then tests of controls for the current year would be:

Accepted Answer

A)  increased in number. 
B)  reduced in number. 
C)  not performed. 
D)  unchanged from prior planned settings. 
A)  increased in number. 
B)  reduced in number. 
C)  not performed. 
D)  unchanged from prior planned settings.

Question 7

For which of the following audit procedures would audit sampling not be appropriate?

Accepted Answer

A)  Review sales transactions for large and unusual amounts. 
B)  Examine a sample of duplicate sales invoices for credit approval. 
C)  Compare the quantity on duplicate sales invoices with the quantity on related shipping documents. 
D)  Audit sampling is appropriate for each of the above procedures. 
A)  Review sales transactions for large and unusual amounts. 
B)  Examine a sample of duplicate sales invoices for credit approval. 
C)  Compare the quantity on duplicate sales invoices with the quantity on related shipping documents. 
D)  Audit sampling is appropriate for each of the above procedures.

Question 8

Directed sample selection,block sample selection,and haphazard sample selection are three types of probabilistic sample selection methods.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would have the least impact in determining sample size?

Accepted Answer

A)  Acceptable risk of overreliance 
B)  Risk of assessing control risk too low 
C)  Tolerable exception rate 
D)  Population size 
A)  Acceptable risk of overreliance 
B)  Risk of assessing control risk too low 
C)  Tolerable exception rate 
D)  Population size

Question 10

Which of the following represents the best description of the tolerable exception?

Accepted Answer

A)  The highest exception rate the auditor will permit in the control being tested and still conclude it is operating effectively 
B)  The highest exception rate the auditor expects to find in the population 
C)  The number of exceptions found in the sample divided by the sample size 
D)  The highest estimated exception rate in a population at a given EPER 
A)  The highest exception rate the auditor will permit in the control being tested and still conclude it is operating effectively 
B)  The highest exception rate the auditor expects to find in the population 
C)  The number of exceptions found in the sample divided by the sample size 
D)  The highest estimated exception rate in a population at a given EPER

Question 11

Which of the following statements regarding block sampling is least likely to be true?

Accepted Answer

A)  Block sampling is the selection of several items in sequence. 
B)  It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used. 
C)  Only one block should be selected to increase the probability of a representative sample. 
D)  Once the first item in the block is selected, the remainder of the block is chosen automatically. 
A)  Block sampling is the selection of several items in sequence. 
B)  It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used. 
C)  Only one block should be selected to increase the probability of a representative sample. 
D)  Once the first item in the block is selected, the remainder of the block is chosen automatically.

Question 12

When using statistical sampling,the auditor would most likely require a smaller sample if the:

Accepted Answer

A)  population increases. 
B)  desired reliability decreases. 
C)  desired precision interval narrows. 
D)  expected exception rate increases. 
A)  population increases. 
B)  desired reliability decreases. 
C)  desired precision interval narrows. 
D)  expected exception rate increases.

Question 13

As the auditor you are assessing the proper sample size to use in testing controls.When using attributes sampling which of the following is most correct?

Accepted Answer

A)  A 10% change in population size will have the least effect on sample size. 
B)  A 10% change in the tolerable deviation rate will have the least effect on sample size. 
C)  A 10% change in the expected deviation rate will have the least effect on sample size. 
D)  A 10% change in the tolerable will have the least effect on sample size. 
A)  A 10% change in population size will have the least effect on sample size. 
B)  A 10% change in the tolerable deviation rate will have the least effect on sample size. 
C)  A 10% change in the expected deviation rate will have the least effect on sample size. 
D)  A 10% change in the tolerable will have the least effect on sample size.

Question 14

In systematic sample selection,the population size is divided by the number of sample items desired in order to determine the:

Accepted Answer

A)  sampling interval. 
B)  tolerable exception rate. 
C)  computed upper exceptions rate. 
D)  mean. 
A)  sampling interval. 
B)  tolerable exception rate. 
C)  computed upper exceptions rate. 
D)  mean.

Question 15

Which of the following statements is most correct?

Accepted Answer

A)  A sample of all items of a population will eliminate sampling risk, but increase nonsampling risk. 
B)  The use of an appropriate sample selection technique ensures a representative sample. 
C)  The auditor's failure to recognize an exception is a significant cause of sampling risk. 
D)  The use of inappropriate audit procedures is a significant cause of nonsampling risk. 
A)  A sample of all items of a population will eliminate sampling risk, but increase nonsampling risk. 
B)  The use of an appropriate sample selection technique ensures a representative sample. 
C)  The auditor's failure to recognize an exception is a significant cause of sampling risk. 
D)  The use of inappropriate audit procedures is a significant cause of nonsampling risk.

Question 16

Which of the following is the exception rate that the auditor expects to find before testing?

Accepted Answer

A)  Sample exception rate 
B)  Estimated population exception rate 
C)  Computed exception rate 
D)  Tolerable exception rate 
A)  Sample exception rate 
B)  Estimated population exception rate 
C)  Computed exception rate 
D)  Tolerable exception rate

Question 17

Simple random sampling:

Accepted Answer

A)  is used when there is a need to emphasize one or more types of population items. 
B)  requires both input and output parameters to be set when using a random number generator. 
C)  is generally used with replacement sampling. 
D)  is a probabilistic sampling method. 
A)  is used when there is a need to emphasize one or more types of population items. 
B)  requires both input and output parameters to be set when using a random number generator. 
C)  is generally used with replacement sampling. 
D)  is a probabilistic sampling method.

Question 18

In performing a review of a client's cash disbursements,an auditor uses systematic sample selection with a random start.The primary disadvantage of this technique is population items:

Accepted Answer

A)  may occur twice in the sample. 
B)  must be reordered in a systematic pattern before the sample can be drawn. 
C)  may occur in a systematic pattern, thus negating the randomness of the sample. 
D)  must be replaced in the population after sampling to permit valid statistical inference. 
A)  may occur twice in the sample. 
B)  must be reordered in a systematic pattern before the sample can be drawn. 
C)  may occur in a systematic pattern, thus negating the randomness of the sample. 
D)  must be replaced in the population after sampling to permit valid statistical inference.

Question 19

The exception rate that the auditor will permit in the population and still be willing to use the preliminary control risk assessment is called the:

Accepted Answer

A)  acceptable exception rate. 
B)  estimated population exception rate. 
C)  sample exception rate. 
D)  tolerable exception rate. 
A)  acceptable exception rate. 
B)  estimated population exception rate. 
C)  sample exception rate. 
D)  tolerable exception rate.

Question 20

An advantage of using statistical sampling techniques is that such techniques:

Accepted Answer

A)  mathematically measure risk. 
B)  eliminate the need for judgmental decisions. 
C)  define the values of precision and reliability required to provide audit satisfaction. 
D)  have been established in the courts to be superior to judgmental sampling. 
A)  mathematically measure risk. 
B)  eliminate the need for judgmental decisions. 
C)  define the values of precision and reliability required to provide audit satisfaction. 
D)  have been established in the courts to be superior to judgmental sampling.

Exam 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Which of the following results in a larger sample size?

In testing controls,an overreliance on internal controls that reduces substantive tests and increases the likelihood of not detecting a material misstatement occurs because:

The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is:

In nonstatistical sampling,the calculated sampling error is the difference between the tolerable exception rate and the sample exception rate.

Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

If the auditor decides to assess control risk at the moderate level in a private company audit,when in previous years the auditor set control risk at the maximum level,then tests of controls for the current year would be:

For which of the following audit procedures would audit sampling not be appropriate?

Directed sample selection,block sample selection,and haphazard sample selection are three types of probabilistic sample selection methods.

Which of the following would have the least impact in determining sample size?

Which of the following represents the best description of the tolerable exception?

Which of the following statements regarding block sampling is least likely to be true?

When using statistical sampling,the auditor would most likely require a smaller sample if the:

As the auditor you are assessing the proper sample size to use in testing controls.When using attributes sampling which of the following is most correct?

In systematic sample selection,the population size is divided by the number of sample items desired in order to determine the:

Which of the following statements is most correct?

Which of the following is the exception rate that the auditor expects to find before testing?

Simple random sampling:

In performing a review of a client's cash disbursements,an auditor uses systematic sample selection with a random start.The primary disadvantage of this technique is population items:

The exception rate that the auditor will permit in the population and still be willing to use the preliminary control risk assessment is called the:

An advantage of using statistical sampling techniques is that such techniques:

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters