Exam 9: Audit Sampling: An Application to Substantive Tests of Account Balances

An auditor established a $60,000 tolerable misstatement for an account balance of $1,000,000.The auditor selected a sample of every twentieth item from the population of 1,000 items that represented the asset account balance and discovered overstatements of $3,700 and understatements of $200.Under these circumstances,the auditor most likely would conclude that

The assurance factor for nonstatistical sampling is based on

Monetary-unit sampling is based on attribute sampling concepts.

The objective of monetary-unit sampling is to test the assertion that no material misstatements exist in an account balance or class of transactions.

In monetary-unit sampling,population size is

In statistical sampling,setting the appropriate confidence level and desired sample precision are decisions made by the auditor that will affect sample size for a substantive procedure.Which of the following should not be a factor in the choice of desired precision?

Which of the following sampling methods would be used to estimate a numerical measurement of population,such as the dollar value of an account?

For monetary-unit sampling,the number of items tested is

In applying classical variables sampling,an auditor attempts to

What is one advantage and one disadvantage of classical variables sampling?

The use of the ratio projection is most effective when

If the upper limit on misstatements exceeds tolerable misstatement,the auditor is least likely to

Haphazard selection allows the auditor to select items judgmentally.

In examining cash disbursements,an auditor plans to choose a sample using systematic selection with a random start.The primary advantage of such a systematic selection is that population items

The risk of incorrect acceptance and the risk of overreliance relate to the

Which of the following statements best describes an inherent limitation of the monetary-unit sampling method?

Monetary-unit sampling is said to eliminate the need to stratify the sample because

Summarize the concept behind monetary-unit sampling (MUS).How does MUS use attribute-sampling theory?

Classical variables sampling uses normal distribution theory to evaluate the characteristics of a population based on sample data.

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.Such a situation illustrates the risk of