Exam 18: Attributes Sampling

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 establishes a tolerable deviation rate of 8%.Based on past audits,the audit team would normally estimate the expected population deviation rate at 2%; however,because of improvements in the client's internal control,they now feel that a rate of 1.25% is appropriate.Which of the following is not true with respect to the impact of the reduction in the expected population deviation rate on sample size?

Lincoln,CPA,selected a sample of 100 items by dividing the population of 100,000 sales invoices by 100.With a random start,she then selected every 1,000th invoice.This selection process is referred to as:

Which of the following would not be an example of nonsampling risk in an attributes sampling application?

Smith,CPA,is using attributes sampling to test Swimmer,Inc.'s internal controls related to the accuracy of sales invoices.Smith defined the population as all 5,000 of Swimmer's sales invoices and determined the appropriate sample size was 200 invoices.What is Smith's sampling interval if systematic random selection is used?

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

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would:

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

Williams,CPA,is using attributes sampling to test controls related to the completeness of purchasing transactions.Williams decided to select all purchase orders from September for testing.This is an example of

  Sales invoices are commonly stored in a filing cabinet during the 30-day return period before being input in the company’s database. To ensure the 30-day return period was not exceeded, Walters decided to pull a few invoices from each drawer until the desired sample size was collected for examination.

Why is the auditor more concerned with the risk of overreliance than the risk of underreliance?

The maximum rate of deviation that may exist in the operation of a control policy or procedure before the auditors would reduce reliance on internal control is referred to as:

What is the general order in which the following steps in attributes sampling are performed? 1 = Define the population 2 = Determine the objective of sampling 3 = Determine the sample size 4 = Select the sample

Which of the following components of the audit risk model is most closely associated with attributes sampling?

With respect to the use of attributes sampling,in which of the following steps would nonstatistical sampling and statistical sampling differ? Definingthe Evaluating sample population renult A Yes Yes B. Yes No C. No Yes D. No No

Judgments about the frequency of control deviations that identify a particular control risk level are related to:

To determine the appropriate sample size for an attributes sampling application,Williams,CPA,defined the population to be 25,000 sales invoices.Williams then assessed the risk of overreliance to be 10%,the tolerable rate of deviation to be 4%,and the expected population deviation rate to be 2.5%.Using the AICPA Sample Size tables,the appropriate sample size would be:

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

Nonsampling risk normally occurs during which step of the sampling process?

The audit team is planning to examine a sample of control policies and procedures.Assume that the audit team establishes a tolerable rate of deviation of 6% and,based on past audits,estimates the expected population deviation rate to be 2%.Which of the following is not true with respect to the impact of the risk of overreliance on sample size?

In each of the following situations,indicate whether a fixed (F),sequential (S),or discovery (D)attributes sampling plan is being used. 1____.The audit team has determined the tolerable rate of deviation to be 5%,the risk of overreliance to be 10%,and the expected population deviation rate to be zero. 2____.Based on the risk of overreliance,expected population deviation rate and tolerable rate of deviation,the audit team examined a sample of 50 items before determining if additional items should be included in the sample. 3____.Using the AICPA Sample Size tables,the audit team determined the appropriate sample size and selected the sample items.However,the audit team stopped the examination after a deviation was found. 4____.The audit team established the risk of overreliance to be 5%,the tolerable rate of deviation to be 4%,and the expected population deviation rate to be 3%.Using the AICPA Sample Size tables,the audit team decided to sample over 1,000 items. 5____.The audit team is performing a sampling application to evaluate the operating effectiveness of an entity's internal controls.The application used could provide a more efficient method of examination,but it is important that the audit team evaluate the sample in the order they were selected.