Exam 18: Attributes Sampling

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

When committing the risk of underreliance,the true (but unknown)deviation rate in the population is _______________________ than the tolerable rate of deviation.

When performing tests of controls,the auditor typically uses __________________ sampling.

As the risk of overreliance decreases,the upper limit rate of deviation increases,holding all other factors constant.

If an auditor calculated an upper limit rate of deviation of 5 percent when the tolerable rate of deviation was 4 percent,the auditor would conclude that

The risk of overreliance exposes the auditor to an effectiveness loss.

As a result of tests of controls,an auditor assessed control risk too low and decreased the number of substantive procedures performed.This assessment occurred because the true deviation rate in the population was

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

Samples to test internal control procedures are intended to provide a basis for an auditor to conclude whether

In planning a statistical sample for a test of controls,an auditor increased the expected population deviation rate from the rates observed in prior audits because of the results of prior tests of controls and the overall control environment.The auditor most likely would then increase the planned

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?

The upper limit rate of deviation has a (risk of overreliance)probability of being less than the true population deviation rate.

Which of the following factors used to determine sample size is normally based on the extent to which the audit team expects to rely on the internal control being examined?

M.Smith is studying the internal control of Pooh Company.Smith has identified client verification of sales invoices as an important control and,based on the acceptable level of control risk and experience from prior audits,has made the following assessments: a.What is the appropriate sample size? b.Ignore your answer from A.Assume that Smith examined a sample of 80 items and found two deviations.Calculate the following measures: (1)Sample rate of deviation. (2)Upper limit rate of deviation. (3)Allowance for sampling risk. c.What is Smith's initial conclusion regarding Pooh Company's internal control? d.What possible actions are available to Smith with respect to Pooh Company's internal control?

Rome,CPA,is examining the internal control of Smack,Inc.Rome has established a risk of overreliance of 10%,an expected population deviation rate of 1%,and a tolerable rate of deviation of 5%. Based on your answer to question 86,what is the allowance for sampling risk?

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

The risk of underreliance is the probability that the evidence in the sample indicates

The tolerable rate of deviation has an inverse relationship with control risk; that is,as the acceptable level of control risk decreases,the appropriate tolerable rate of deviation increases.

Jerry Tim is examining an important internal control in the audit of Langly Company.In past audits,deviations from this control have been observed at a minimal rate (less than 0.1 percent); however,because the account balance affected by this control is highly susceptible to fraud,it is important that Jerry obtain a high level of assurance that deviations occur at no higher than a predetermined (low)rate.Which of the following sampling methods would Jerry most likely use to evaluate this control?

If the upper limit rate of deviation exceeds the tolerable rate of deviation,the auditor would most likely