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

For attributes sampling,of the three factors that enter into sample size determination,which two factors can the auditor adjust to reflect the importance of the control?

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

An auditor plans to examine a sample of 20 checks for countersignatures as prescribed by the entity's internal control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and

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

If the size of the sample to be used in a particular test of controls has not been determined by utilizing statistical concepts,but the sample has been chosen in accordance with random selection procedures

The tolerable deviation rate for a test of controls is generally

In determining the sample size for a test of controls,an auditor should consider the expected deviation rate,desired confidence level,and the

Harvey Jones,CPA,uses statistical sampling to test control procedures.What is a benefit of using statistical sampling?

In nonstatistical sampling for tests of controls,increasing the desired confidence level results in a

Which of the following factors does an auditor generally need to consider in planning a particular audit sample for a test of controls?

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?

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

Before performing sampling procedures in an audit of controls,Sue set the tolerable deviation rate at 4.0%.After the procedures,she computes a computed upper deviation rate of 5.4%.What can Sue conclude about the entity's controls?

Your uncle Bob,a CPA,has recently started auditing and he wants your advice on some tests of sales transactions he is conducting.Bob selected a haphazard sample of 15 sales with a total book value of $75,000.In his sample,he found a total of $500 in net overstatement errors.The total sales balance per book is $10,000,000.Overall materiality for the engagement is $300,000.Tolerable misstatement for sales is $70,000.If the sample results indicate that Bob's best estimate of total misstatement in sales is $35,000,can Bob safely conclude that no additional work is needed in this area? Include in your answer a clear discussion of how sample results are compared to tolerable misstatement.

Confidence level and sampling risk are related to sample size.

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

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

For a large population of cash disbursement transactions,Smith,CPA is testing controls by using attribute sampling techniques.Anticipating an expected deviation rate of 3 percent,Smith found from a table that the required sample size is 400 with a tolerable deviation rate of 5 percent and a desired confidence level of 95 percent.If Smith anticipated an expected deviation rate of only 2 percent but wanted to maintain the same tolerable deviation rate and confidence level,the sample size would be closest 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 better 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.

The larger the sample,the lower the confidence level and the lower the sampling risk.