Question 1

PPS samples can be obtained in an efficient manner using all but which of the following?

Accepted Answer

A)  Hand selection by the auditor 
B)  Computer software 
C)  Random number tables 
D)  Systematic sampling techniques 
A)  Hand selection by the auditor 
B)  Computer software 
C)  Random number tables 
D)  Systematic sampling techniques

Question 2

If analytical procedures are performed with no indications of likely misstatements,ARIA will ________ and the sample size will ________.

Accepted Answer

A)  remain the same, increase 
B)  decrease, decrease 
C)  increase, decrease 
D)  decrease, increase 
A)  remain the same, increase 
B)  decrease, decrease 
C)  increase, decrease 
D)  decrease, increase

Question 3

The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:

Accepted Answer

A)  difference estimation. 
B)  mean-per-unit estimation. 
C)  ratio estimation. 
D)  monetary-unit sampling. 
A)  difference estimation. 
B)  mean-per-unit estimation. 
C)  ratio estimation. 
D)  monetary-unit sampling.

Question 4

The primary factor affecting the auditor's decision about acceptable risk of incorrect acceptance (ARIA)is assessed inherent risk.

Accepted Answer

A) True 
 B)False

Question 5

Which balance-related audit objective cannot be assessed using monetary unit sampling?

Accepted Answer

A)  Accuracy 
B)  Completeness 
C)  Existence 
D)  All of the above can be assessed using monetary unit sampling. 
A)  Accuracy 
B)  Completeness 
C)  Existence 
D)  All of the above can be assessed using monetary unit sampling.

Question 6

The AICPA audit sampling formula for computing nonstatistical tests of details of balances sample size is to multiply the population recorded amount by the ________ and then divide by the ________.

Accepted Answer

A)  confidence factor, ARIA 
B)  confidence factor, tolerable misstatement 
C)  ARO, tolerable misstatement 
D)  risk of incorrect acceptance, confidence factor 
A)  confidence factor, ARIA 
B)  confidence factor, tolerable misstatement 
C)  ARO, tolerable misstatement 
D)  risk of incorrect acceptance, confidence factor

Question 7

Which of the following does not have to be considered in determining the initial sample size of a test of details?

Accepted Answer

A)  Tolerable misstatement 
B)  Acceptable risk of incorrect rejection 
C)  Estimate of misstatements in the population 
D)  Acceptable audit risk 
A)  Tolerable misstatement 
B)  Acceptable risk of incorrect rejection 
C)  Estimate of misstatements in the population 
D)  Acceptable audit risk

Question 8

When using monetary unit sampling,the recorded dollar population is a definition of all the items in the:

Accepted Answer

A)  population. 
B)  population which the auditor has included in the sample. 
C)  population which contain errors. 
D)  sample which contain errors. 
A)  population. 
B)  population which the auditor has included in the sample. 
C)  population which contain errors. 
D)  sample which contain errors.

Question 9

Which of the following item(s)are needed to determine the sample size using MUS?

Accepted Answer

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

Question 10

The population standard deviation has a significant effect on the computed precision interval.

Accepted Answer

A) True 
 B)False

Question 11

The auditor must deal with layers of the computed upper deviation rate from the attributes table because there are different error assumptions for each error.Assume a sample of 100 had found one error,and the computed upper deviation rate is shown in the following table:   The precision limit for the layer with one error is:

Accepted Answer

A)  2.3%. 
B)  3.8% 
C)  6.1%. 
D)  1.5%. 
A)  2.3%. 
B)  3.8% 
C)  6.1%. 
D)  1.5%.

Question 12

An estimate of the largest likely overstatement in a population at a given ARIA,using monetary unit sampling is the:

Accepted Answer

A)  point estimates. 
B)  precision intervals. 
C)  confidence intervals. 
D)  misstatement bounds. 
A)  point estimates. 
B)  precision intervals. 
C)  confidence intervals. 
D)  misstatement bounds.

Question 13

Which of the following is not a problem with monetary unit selection?

Accepted Answer

A)  Population items with a zero recorded balance 
B)  Population items that should have a zero balance but do not 
C)  Accounts with negative balances 
D)  Accounts with small recorded balances that are significantly understated 
A)  Population items with a zero recorded balance 
B)  Population items that should have a zero balance but do not 
C)  Accounts with negative balances 
D)  Accounts with small recorded balances that are significantly understated

Question 14

When using MUS,the projected misstatement is the percentage misstatement times the sampling interval.

Accepted Answer

A) True 
 B)False

Question 15

What is the purpose of applying stratified sampling to a population?

Accepted Answer

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

Question 16

In difference estimation sampling,the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.

Accepted Answer

A) True 
 B)False

Question 17

If the misstatement in a population is larger then tolerable misstatement without considering sampling error,the population will be considered unacceptable.

Accepted Answer

A) True 
 B)False

Question 18

The most commonly used method of statistical sampling for tests of details of balances is:

Accepted Answer

A)  attributes sampling. 
B)  systematic sampling. 
C)  discovery sampling. 
D)  monetary unit sampling. 
A)  attributes sampling. 
B)  systematic sampling. 
C)  discovery sampling. 
D)  monetary unit sampling.

Question 19

When errors are found in a sample,auditors in practice generally make the assumption:

Accepted Answer

A)  of a 100% assumption for all errors. 
B)  that the population errors are larger than the sample errors. 
C)  that the population errors are smaller than the sample errors. 
D)  that the actual sample errors are representative of the population errors. 
A)  of a 100% assumption for all errors. 
B)  that the population errors are larger than the sample errors. 
C)  that the population errors are smaller than the sample errors. 
D)  that the actual sample errors are representative of the population errors.

Question 20

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the true population misstatement exceeds a tolerable amount.Which of the following factors should be considered by the auditor in making this assessment?

Accepted Answer

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

Exam 17: Audit Sampling for Tests of Details of Balances

PPS samples can be obtained in an efficient manner using all but which of the following?

If analytical procedures are performed with no indications of likely misstatements,ARIA will ________ and the sample size will ________.

The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:

The primary factor affecting the auditor's decision about acceptable risk of incorrect acceptance (ARIA)is assessed inherent risk.

Which balance-related audit objective cannot be assessed using monetary unit sampling?

The AICPA audit sampling formula for computing nonstatistical tests of details of balances sample size is to multiply the population recorded amount by the ________ and then divide by the ________.

Which of the following does not have to be considered in determining the initial sample size of a test of details?

When using monetary unit sampling,the recorded dollar population is a definition of all the items in the:

Which of the following item(s)are needed to determine the sample size using MUS?

The population standard deviation has a significant effect on the computed precision interval.

An estimate of the largest likely overstatement in a population at a given ARIA,using monetary unit sampling is the:

Which of the following is not a problem with monetary unit selection?

When using MUS,the projected misstatement is the percentage misstatement times the sampling interval.

What is the purpose of applying stratified sampling to a population?

In difference estimation sampling,the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.

If the misstatement in a population is larger then tolerable misstatement without considering sampling error,the population will be considered unacceptable.

The most commonly used method of statistical sampling for tests of details of balances is:

When errors are found in a sample,auditors in practice generally make the assumption:

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the true population misstatement exceeds a tolerable amount.Which of the following factors should be considered by the auditor in making this assessment?

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

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

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

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

If analytical procedures are performed with no indications of likely misstatements,ARIA will and the sample size will .

The AICPA audit sampling formula for computing nonstatistical tests of details of balances sample size is to multiply the population recorded amount by the and then divide by the .