Question 1

Which of the following is true with respect to the use of sequential sampling when used with attributes sampling?

Accepted Answer

A) Sequential sampling is normally used when expected deviations occur at a relatively low rate in the population. 
B) Sequential sampling is normally used when the audit team wishes to place greater reliance on internal control. 
C) Sequential sampling may provide a more efficient sample size than the use of traditional attributes sampling. 
D) Sequential sampling will always provide auditors with the smallest final sample size for a given set of sampling parameters. 
A) Sequential sampling is normally used when expected deviations occur at a relatively low rate in the population. 
B) Sequential sampling is normally used when the audit team wishes to place greater reliance on internal control. 
C) Sequential sampling may provide a more efficient sample size than the use of traditional attributes sampling. 
D) Sequential sampling will always provide auditors with the smallest final sample size for a given set of sampling parameters.

Question 2

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

Accepted Answer

A) As the population size doubles,the sample size should increase by about 67%. 
B) The sample size is inversely proportional to the expected population deviation rate. 
C) There is no relationship between the tolerable rate of deviation and the sample size. 
D) When evaluation very large populations,the population size has little or no effect on the sample size. 
A) As the population size doubles,the sample size should increase by about 67%. 
B) The sample size is inversely proportional to the expected population deviation rate. 
C) There is no relationship between the tolerable rate of deviation and the sample size. 
D) When evaluation very large populations,the population size has little or no effect on the sample size.

Question 3

T&T Company’s purchase orders are already pre-numbered and listed in numerical order within the company’s database. As a result, Walters was able to use one of the firm’s computer programs to identify random numbers and match each number with a corresponding purchase order to test the accuracy assertion.

Accepted Answer

A) unrestricted random (UR) 
B) systematic random (SR) 
C) haphazard (H) 
D) block (
B)  
A) unrestricted random (UR) 
B) systematic random (SR) 
C) haphazard (H) 
D) block (
B)

Question 4

When performing attributes sampling,the appropriate AICPA Sample Size table is initially selected based on the auditors' assessment of the

Accepted Answer

A) Risk of overreliance 
B) Risk of underreliance 
C) Tolerable rate of deviation 
D) Expected population deviation rate 
A) Risk of overreliance 
B) Risk of underreliance 
C) Tolerable rate of deviation 
D) Expected population deviation rate

Question 5

Which of the following is not true with respect to the use of nonstatistical sampling?

Accepted Answer

A) The use of nonstatistical sampling generally results in a smaller sample size. 
B) The use of nonstatistical sampling is permissible under generally accepted auditing standards. 
C) Auditors may use block and haphazard selection methods when using nonstatistical sampling. 
D) The use of nonstatistical sampling does not permit the auditor to control exposure to the risk of overreliance. 
A) The use of nonstatistical sampling generally results in a smaller sample size. 
B) The use of nonstatistical sampling is permissible under generally accepted auditing standards. 
C) Auditors may use block and haphazard selection methods when using nonstatistical sampling. 
D) The use of nonstatistical sampling does not permit the auditor to control exposure to the risk of overreliance.

Question 6

If the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 3%,and desired to control the risk of overreliance to 5%,what sample size would be appropriate in this situation?

Accepted Answer

A) 132 items. 
B) 195 items. 
C) 258 items. 
D) 361 items. 
A) 132 items. 
B) 195 items. 
C) 258 items. 
D) 361 items.

Question 7

When an auditor increases the assessed level of control risk because certain control procedures were determined to be ineffective,the auditor would most likely increase the:

Accepted Answer

A) Extent of tests of controls. 
B) Level of dete procedures. 
C) Level of inherent risk. 
A) Extent of tests of controls. 
B) Level of dete procedures. 
C) Level of inherent risk.

Question 8

The audit team is planning to examine a sample of control policies and procedures.Assume that,based on the intended degree of reliance on internal control,the audit team wishes to control the risk of overreliance to 5% and,based on past audits,estimates the expected population deviation rate to be 2%.Initially,the audit team was planning for a moderate degree of reliance on internal control and established a tolerable rate of deviation of 7%; however,it is considering increasing its reliance on internal control and reducing the tolerable rate of deviation to 4%.Which of the following is not true with respect to the impact of the reduction in the tolerable rate of deviation on sample size?

Accepted Answer

A) The reduction in the tolerable rate of deviation would result in a smaller sample size. 
B) The audit team would likely not seek a reduction in the tolerable rate of deviation unless it could obtain a reduction in its substantive testing. 
C) The resultant sample size assuming the reduction in the tolerable rate of deviation would be 294 items. 
D) The reduction in the tolerable rate of deviation would result in the audit team examining an additional 206 items. 
A) The reduction in the tolerable rate of deviation would result in a smaller sample size. 
B) The audit team would likely not seek a reduction in the tolerable rate of deviation unless it could obtain a reduction in its substantive testing. 
C) The resultant sample size assuming the reduction in the tolerable rate of deviation would be 294 items. 
D) The reduction in the tolerable rate of deviation would result in the audit team examining an additional 206 items.

Question 9

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

Accepted Answer

A) Less than the risk of overreliance,based on the auditor's sample. 
B) Less than the deviation rate in the auditor's sample. 
C) Greater than the risk of overreliance,based on the auditor's sample. 
D) Greater than the deviation rate in the auditor's sample. 
A) Less than the risk of overreliance,based on the auditor's sample. 
B) Less than the deviation rate in the auditor's sample. 
C) Greater than the risk of overreliance,based on the auditor's sample. 
D) Greater than the deviation rate in the auditor's sample.

Question 10

Using the appropriate sampling tables,identify the missing data for each of the following independent attributes sampling applications. $$\begin{array} { l c c c } 
\text {  } &  \mathrm { A } &\mathrm { B }  &\mathrm { C }  \
\text { Risk of overeliarice} & 5\%& 10\%&(6) \
\text { Sarmle Size } & 60 & (4)& 80 \
\text { Number of deviations } & \text { (1) } & 5 & 5 \
\text { Sample rate of deviation } & 5 \% / 4 & 10 \% & \text { (7) } \
\text { Upper lirnit rate of deviation } & \text { (2) } & \text { (5) } & 12.7\% \
\text { Allowarce for sarmpling risk } & \text { (3) } & 7.8 \% & \text { (8) }
\end{array}$$

Accepted Answer

1.3; 2.12.5%; 3.7.5%

Question 11

Which of the following statements is correct regarding nonstatistical sampling?

Accepted Answer

A) Nonstatistical sampling must use random selection techniques. 
B) The sample size when using nonstatistical sampling methods is generally not comparable to that determined using statistical sampling methods. 
C) Nonstatistical sampling does not use a formal process to mathematically estimate the allowance for sampling risk. 
D) When using nonstatistical sampling,the audit team is not required to select a sample that is representative of the population. 
A) Nonstatistical sampling must use random selection techniques. 
B) The sample size when using nonstatistical sampling methods is generally not comparable to that determined using statistical sampling methods. 
C) Nonstatistical sampling does not use a formal process to mathematically estimate the allowance for sampling risk. 
D) When using nonstatistical sampling,the audit team is not required to select a sample that is representative of the population.

Question 12

The AICPA has developed sample size tables for attributes sampling that specifically incorporate all of the following factors except for the:

Accepted Answer

A) Expected population deviation rate 
B) Risk of overreliance 
C) Tolerable rate of deviation 
D) Sample rate of deviation 
A) Expected population deviation rate 
B) Risk of overreliance 
C) Tolerable rate of deviation 
D) Sample rate of deviation

Question 13

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

Accepted Answer

A) Inspecting purchase orders for proper approval by supervisors. 
B) Making an independent estimate of recorded payroll expense. 
C) Determining that all payables are recorded at year end. 
D) Selecting accounts receivable for confirmation of account balances. 
A) Inspecting purchase orders for proper approval by supervisors. 
B) Making an independent estimate of recorded payroll expense. 
C) Determining that all payables are recorded at year end. 
D) Selecting accounts receivable for confirmation of account balances.

Question 14

In evaluating this sample,the auditor decided to increase the level of the preliminary assessment of control risk because the:

Accepted Answer

A) Tolerable rate of deviation (7%)was less than the upper limit rate of deviation (8%). 
B) Expected population deviation rate (7%)was more than the percentage of errors in the sample (3.5%). 
C) Expected population deviation rate (2.5%)was less than the tolerable rate of deviation. 
D) Upper limit rate of deviation (8%)was more than the percentage of errors in the sample (3.5%). 
A) Tolerable rate of deviation (7%)was less than the upper limit rate of deviation (8%). 
B) Expected population deviation rate (7%)was more than the percentage of errors in the sample (3.5%). 
C) Expected population deviation rate (2.5%)was less than the tolerable rate of deviation. 
D) Upper limit rate of deviation (8%)was more than the percentage of errors in the sample (3.5%).

Question 15

The allowance for sampling risk was:

Accepted Answer

A) 5.5%. 
B) 4.5%. 
C) 3.5%. 
D) 1%. 
A) 5.5%. 
B) 4.5%. 
C) 3.5%. 
D) 1%.

Question 16

In order for the auditor to decide to perform tests of controls,which of the following relationships should exist?

Accepted Answer

A) The sampling risk should be less than 5%. 
B) The tolerable rate of deviation should exceed the expected population deviation rate. 
C) The expected population deviation rate should exceed the risk of overreliance. 
D) The expected population deviation rate should exceed the tolerable rate of deviation. 
A) The sampling risk should be less than 5%. 
B) The tolerable rate of deviation should exceed the expected population deviation rate. 
C) The expected population deviation rate should exceed the risk of overreliance. 
D) The expected population deviation rate should exceed the tolerable rate of deviation.

Question 17

What is an auditor's evaluation of a statistical sample for attributes when a test of 100 documents results in 4 deviations if the tolerable rate of deviation is 5%,the expected population deviation rate is 3%,and the allowance for sampling risk is 2%?

Accepted Answer

A) Accept the sample results as support for planned reliance on the control because the tolerable rate of deviation less then allowance for sampling risk equals the expected population deviation rate. 
B) Modify planned reliance on the control because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation. 
C) Modify planned reliance on the control because the tolerable rate of deviation plus the allowance for sampling risk exceeds the expected population deviation rate. 
D) Accept the sample results as support for planned reliance on the control because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation. 
A) Accept the sample results as support for planned reliance on the control because the tolerable rate of deviation less then allowance for sampling risk equals the expected population deviation rate. 
B) Modify planned reliance on the control because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation. 
C) Modify planned reliance on the control because the tolerable rate of deviation plus the allowance for sampling risk exceeds the expected population deviation rate. 
D) Accept the sample results as support for planned reliance on the control because the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation.

Question 18

Walters created a list of all sales invoices to verify that they were supported by the appropriate shipping documents. Invoice number 15 was selected first for examination, followed by the invoices numbered 30, 45, 60, 75, 90, and so on until 40 invoices had been selected.

Accepted Answer

A) unrestricted random (UR) 
B) systematic random (SR) 
C) haphazard (H) 
D) block (
B)  
A) unrestricted random (UR) 
B) systematic random (SR) 
C) haphazard (H) 
D) block (
B)

Question 19

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

Accepted Answer

A) More than the risk of overreliance based on the auditor's sample. 
B) More than the deviation rate in the auditor's sample. 
C) Less than the risk of overreliance based on the auditor's sample. 
D) Less than the deviation rate in the auditor's sample. 
A) More than the risk of overreliance based on the auditor's sample. 
B) More than the deviation rate in the auditor's sample. 
C) Less than the risk of overreliance based on the auditor's sample. 
D) Less than the deviation rate in the auditor's sample.

Question 20

Which of the following does not have a direct relationship with sample size?

Accepted Answer

A) Expected population deviation rate. 
B) Population size. 
C) Risk of overreliance. 
D) All of the above have a direct relationship with sample size. 
A) Expected population deviation rate. 
B) Population size. 
C) Risk of overreliance. 
D) All of the above have a direct relationship with sample size.

Which of the following is true with respect to the use of sequential sampling when used with attributes sampling?

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

When performing attributes sampling,the appropriate AICPA Sample Size table is initially selected based on the auditors' assessment of the

Which of the following is not true with respect to the use of nonstatistical sampling?

If the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 3%,and desired to control the risk of overreliance to 5%,what sample size would be appropriate in this situation?

When an auditor increases the assessed level of control risk because certain control procedures were determined to be ineffective,the auditor would most likely increase the:

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

Which of the following statements is correct regarding nonstatistical sampling?

The AICPA has developed sample size tables for attributes sampling that specifically incorporate all of the following factors except for the:

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

In evaluating this sample,the auditor decided to increase the level of the preliminary assessment of control risk because the:

The allowance for sampling risk was:

In order for the auditor to decide to perform tests of controls,which of the following relationships should exist?

What is an auditor's evaluation of a statistical sample for attributes when a test of 100 documents results in 4 deviations if the tolerable rate of deviation is 5%,the expected population deviation rate is 3%,and the allowance for sampling risk is 2%?

Walters created a list of all sales invoices to verify that they were supported by the appropriate shipping documents. Invoice number 15 was selected first for examination, followed by the invoices numbered 30, 45, 60, 75, 90, and so on until 40 invoices had been selected.

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

Which of the following does not have a direct relationship with sample size?

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Exam 18: Attributes Sampling

Which of the following is true with respect to the use of sequential sampling when used with attributes sampling?

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

When performing attributes sampling,the appropriate AICPA Sample Size table is initially selected based on the auditors' assessment of the

Which of the following is not true with respect to the use of nonstatistical sampling?

If the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 3%,and desired to control the risk of overreliance to 5%,what sample size would be appropriate in this situation?

When an auditor increases the assessed level of control risk because certain control procedures were determined to be ineffective,the auditor would most likely increase the:

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

Which of the following statements is correct regarding nonstatistical sampling?

The AICPA has developed sample size tables for attributes sampling that specifically incorporate all of the following factors except for the:

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

In evaluating this sample,the auditor decided to increase the level of the preliminary assessment of control risk because the:

The allowance for sampling risk was:

In order for the auditor to decide to perform tests of controls,which of the following relationships should exist?

What is an auditor's evaluation of a statistical sample for attributes when a test of 100 documents results in 4 deviations if the tolerable rate of deviation is 5%,the expected population deviation rate is 3%,and the allowance for sampling risk is 2%?

Walters created a list of all sales invoices to verify that they were supported by the appropriate shipping documents. Invoice number 15 was selected first for examination, followed by the invoices numbered 30, 45, 60, 75, 90, and so on until 40 invoices had been selected.

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

Which of the following does not have a direct relationship with sample size?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Variables Sampling

Auditing and Information Technology

Filters