Question 1

A sample of all items in a population will have a zero sampling risk.

Accepted Answer

A) True 
 B)False

Question 2

The tolerable exception rate is the rate that the auditor will permit in the population and still be willing to conclude a control is effective.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not a term related to evaluating results in audit sampling until after a sample is tested and evaluated?

Accepted Answer

A)  Sample exception rate 
B)  Estimated population exception rate 
C)  Computed upper exception rate 
D)  Exception 
A)  Sample exception rate 
B)  Estimated population exception rate 
C)  Computed upper exception rate 
D)  Exception

Question 4

You are designing the audit plan for Mathews & Company.You are a strong proponent for statistical sampling over nonstatistical sampling.Make your case.

Accepted Answer

•More efficient samples
•Quant

Question 5

List the two ways auditors can control sampling risk.

Accepted Answer

Auditors can control sampling

Question 6

There are 14 steps to attributes sampling,divided into three sections:
 plan the sample,select the sample and perform the audit procedures,and evaluate the results.Discuss the three steps that comprise the "evaluate the results" section.

Accepted Answer

The steps that comprise the "evaluate th

Question 7

When choosing the appropriate acceptable risk of overreliance,the auditor needs to:

Accepted Answer

A)  rely on his/her professional judgment. 
B)  err on the side of conservatism. 
C)  consult the professional standards. 
D)  follow SEC guidelines. 
A)  rely on his/her professional judgment. 
B)  err on the side of conservatism. 
C)  consult the professional standards. 
D)  follow SEC guidelines.

Question 8

It is virtually impossible to reduce sampling risk to zero.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is a valid criticism of nonstatistical sampling?

Accepted Answer

A)  Many audit tests, such as footing of journals, must be performed outside a statistical sampling context. 
B)  The cost of performing random selection or testing often exceeds the benefits. 
C)  Nonstatistical sampling does not differ substantially from statistical sampling methods. 
D)  Conclusions may be drawn in more precise ways when using statistical sampling methods. 
A)  Many audit tests, such as footing of journals, must be performed outside a statistical sampling context. 
B)  The cost of performing random selection or testing often exceeds the benefits. 
C)  Nonstatistical sampling does not differ substantially from statistical sampling methods. 
D)  Conclusions may be drawn in more precise ways when using statistical sampling methods.

Question 10

The use of haphazard sample selection is encouraged under professional auditing standards.

Accepted Answer

A) True 
 B)False

Question 11

In the evaluation of the results of an attributes sample,the fact that the exception rate in the sample was 2% rather than the estimated population exception rate of 4% would cause the computed upper exception rate to:

Accepted Answer

A)  be less than the tolerable exception rate. 
B)  equal the tolerable exception rate. 
C)  exceed the tolerable exception rate. 
D)  cannot be determined from the information given. 
A)  be less than the tolerable exception rate. 
B)  equal the tolerable exception rate. 
C)  exceed the tolerable exception rate. 
D)  cannot be determined from the information given.

Question 12

When audit procedures have been completed for an attributes sampling application,the auditor must generalize from the sample to the population.Which of the following statements would be incorrect regarding this process?

Accepted Answer

A)  The auditor would use an attributes sampling table to determine the computed upper exception rate. 
B)  If the sample size is not equal to those provided for in the attributes sampling evaluation tables, the auditor cannot use attribute sampling. 
C)  It would be wrong for the auditor to conclude that the population exception rate is exactly the same as the sample exception rate. 
D)  In selecting the table corresponding to the ARO, it should be the same as the ARO used for determining the initial sample size. 
A)  The auditor would use an attributes sampling table to determine the computed upper exception rate. 
B)  If the sample size is not equal to those provided for in the attributes sampling evaluation tables, the auditor cannot use attribute sampling. 
C)  It would be wrong for the auditor to conclude that the population exception rate is exactly the same as the sample exception rate. 
D)  In selecting the table corresponding to the ARO, it should be the same as the ARO used for determining the initial sample size.

Question 13

There are 14 steps to attributes sampling,divided into three sections:
 plan the sample,select the sample and perform the audit procedures,and evaluate the results.In the planning section there are 9 steps,beginning with "state the audit objective" and ending with "determine the initial sample size." Name and discuss at least 3 steps between the ones listed above.

Accepted Answer

The steps that comprise the "plan the sa

Question 14

A sample in which the characteristics of the sample are the same as those of the population is a(n):

Accepted Answer

A)  variables sample. 
B)  representative sample. 
C)  attributes sample. 
D)  random sample. 
A)  variables sample. 
B)  representative sample. 
C)  attributes sample. 
D)  random sample.

Question 15

What types of exceptions are auditors most concerned with when evaluating populations of accounting data?

Accepted Answer

There are three types of exceptions that

Question 16

A danger in setting the acceptable risk of overreliance too low is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 17

The advantage of systematic sample selection is that:

Accepted Answer

A)  it is easy to use. 
B)  there is limited possibility of it being biased. 
C)  it is unnecessary to determine if the population is arranged randomly. 
D)  it automatically selects items material to the financial statements. 
A)  it is easy to use. 
B)  there is limited possibility of it being biased. 
C)  it is unnecessary to determine if the population is arranged randomly. 
D)  it automatically selects items material to the financial statements.

Question 18

Attributes sampling is based on the ________ distribution,in which each possible sample in the population has one of two possible values,such as yes or no.

Accepted Answer

A)  random 
B)  binomial 
C)  statistical 
D)  nonstatistical 
A)  random 
B)  binomial 
C)  statistical 
D)  nonstatistical

Question 19

To determine if a sample is truly representative of the population,an auditor would be required to:

Accepted Answer

A)  conduct multiple samples of the same population. 
B)  never use sampling because of the expense involved. 
C)  audit the entire population. 
D)  use systematic sample selection. 
A)  conduct multiple samples of the same population. 
B)  never use sampling because of the expense involved. 
C)  audit the entire population. 
D)  use systematic sample selection.

Question 20

When deciding the acceptability of the population:

Accepted Answer

A)  the methodology for deciding the acceptability of the population for attributes differs from determining the acceptability for nonstatistical sampling. 
B)  before the population can be considered acceptable, the CUER determined on the basis of the actual sample results must be less than or equal to TER when both are based on the same ARO. 
C)  when the CUER is greater than the TER, the auditor must increase the sample size. 
D)  the CUER is compared with the TER in total, not for each attribute. 
A)  the methodology for deciding the acceptability of the population for attributes differs from determining the acceptability for nonstatistical sampling. 
B)  before the population can be considered acceptable, the CUER determined on the basis of the actual sample results must be less than or equal to TER when both are based on the same ARO. 
C)  when the CUER is greater than the TER, the auditor must increase the sample size. 
D)  the CUER is compared with the TER in total, not for each attribute.

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

A sample of all items in a population will have a zero sampling risk.

The tolerable exception rate is the rate that the auditor will permit in the population and still be willing to conclude a control is effective.

Which of the following is not a term related to evaluating results in audit sampling until after a sample is tested and evaluated?

You are designing the audit plan for Mathews & Company.You are a strong proponent for statistical sampling over nonstatistical sampling.Make your case.

List the two ways auditors can control sampling risk.

There are 14 steps to attributes sampling,divided into three sections: plan the sample,select the sample and perform the audit procedures,and evaluate the results.Discuss the three steps that comprise the "evaluate the results" section.

When choosing the appropriate acceptable risk of overreliance,the auditor needs to:

It is virtually impossible to reduce sampling risk to zero.

Which of the following statements is a valid criticism of nonstatistical sampling?

The use of haphazard sample selection is encouraged under professional auditing standards.

In the evaluation of the results of an attributes sample,the fact that the exception rate in the sample was 2% rather than the estimated population exception rate of 4% would cause the computed upper exception rate to:

When audit procedures have been completed for an attributes sampling application,the auditor must generalize from the sample to the population.Which of the following statements would be incorrect regarding this process?

A sample in which the characteristics of the sample are the same as those of the population is a(n):

What types of exceptions are auditors most concerned with when evaluating populations of accounting data?

A danger in setting the acceptable risk of overreliance too low is:

The advantage of systematic sample selection is that:

Attributes sampling is based on the ________ distribution,in which each possible sample in the population has one of two possible values,such as yes or no.

To determine if a sample is truly representative of the population,an auditor would be required to:

When deciding the acceptability of the population:

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

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