Exam 8: Audit Sampling: An Overview and Application to Tests of Controls

When performing a test of controls with respect to control over cash receipts,an auditor may use a systematic sampling technique with a start at any randomly selected item.The biggest disadvantage of this type of sampling is that the items in the population

For an attributes sampling plan,the tolerable deviation rate is 4.5%,the computed upper deviation rate is 7%,the sample deviation rate is 3%,and the desired confidence level is 95%.What is the allowance for sampling risk included in the computed upper deviation rate?

Audit sampling is not used for which type of audit evidence?

Based on a 5% risk of assessing control risk too low,how would an auditor interpret a computed upper deviation rate of 7%?

Jones,CPA,believes the industry-wide deviation rate of client billing errors is 3% and has established a tolerable deviation rate of 5%.In the review of client invoices,Jones should use

When testing automated IT controls,the auditor is most likely to do all of the following except:

Which of the following best illustrates the concept of sampling risk?

An auditor is testing internal control procedures that are evidenced on an entity's vouchers.To select the vouchers for testing,the auditor obtains random numbers between the first and last voucher number in the period.If a random number matches the number of a voided voucher,that voucher ordinarily should be replaced by another voucher in the random sample if the voucher

An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods

When determining the sample size of accounts receivable to test,what are three factors that are important for you to consider?

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

An underlying feature of random-based selection of items is that each

Indicate which of the following audit procedures,used as tests of controls,do not involve audit sampling. 1.Observing and evaluating segregation of duties. 2.Testing of whether sales invoices are supported by authorized customer orders and shipping documents. 3.Reviewing client's procedures for accounting for the numerical sequence of shipping documents. 4.Examining sales orders for proper credit approval. 5.Recomputing the information on copies of sales invoices. 6.Comparing the average days outstanding in accounts receivable with industry averages.

Identify the types of audit evidence that are tested using audit sampling techniques.

A Type I error is the risk of incorrect acceptance.

Which of the following best describes the distinguishing feature of statistical sampling?

In attributes sampling,population size has little or no effect on sample size once the population exceeds approximately

Confidence level and sampling risk are related to sample size.

The term precision relates to

Your manager,Sally,believes that nonstatistical sampling is the best method to use on the audit of YaYa Corporation.You,however,believe that statistical sampling is by far the best method.In addition,you have a great deal of training in the proper use of sampling techniques.Prepare an argument to convince Sally why statistical sampling should be used.