Question 1

Which one of the following issues need not be addressed when planning an audit sample to test control procedures?

Accepted Answer

A) Audit objective of the test. 
B) Minimum failure rate. 
C) Expected population deviation rate. 
D) Auditor's allowable risk of assessing control risk too low. 
A) Audit objective of the test. 
B) Minimum failure rate. 
C) Expected population deviation rate. 
D) Auditor's allowable risk of assessing control risk too low. B

Question 2

The individual auditable elements defined by the auditor are the sampling units.

Accepted Answer

A) True 
 B)False  True

Question 3

The most common statistical approaches for substantive testing are classical variables sampling and MUS.

Accepted Answer

A) True 
 B)False  True

Question 4

The population for MUS is defined as the number of dollars in the population being tested.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following describes sampling risk?

Accepted Answer

A) The sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect. 
B) The population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect. 
C) The auditor incorrectly applies sampling methodology. 
D) The sample size will be larger than needed. 
A) The sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect. 
B) The population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect. 
C) The auditor incorrectly applies sampling methodology. 
D) The sample size will be larger than needed.

Question 6

Random sampling can be used even if the auditor does not plan on using statistical sampling.

Accepted Answer

A) True 
 B)False

Question 7

By using data analytics tools,the auditor can potentially audit the whole population rather than taking a sample.

Accepted Answer

A) True 
 B)False

Question 8

Audit sampling implies the gathering of evidence to use as a basis for making valid inferences about the characteristics of the population as a whole without examining every transaction.

Accepted Answer

A) True 
 B)False

Question 9

Population items with zero balances have no chance of being selected using PPS sampling.

Accepted Answer

A) True 
 B)False

Question 10

Monetary unit sampling (MUS)is designed to test whether there is an acceptable risk of account balance understatement.

Accepted Answer

A) True 
 B)False

Question 11

Risks of sampling in tests of controls
Define the following terms as they relate to sampling for tests of controls:
1. tolerable failure rate
2. expected failure rate

Accepted Answer

Tolerable failure rate is the level at w

Question 12

The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?

Accepted Answer

A) Issue a disclaimer of opinion. 
B) Throw out the sample. 
C) Propose adjustments to the client. 
D) Disclose the misstatement in the client's financial statements. 
A) Issue a disclaimer of opinion. 
B) Throw out the sample. 
C) Propose adjustments to the client. 
D) Disclose the misstatement in the client's financial statements.

Question 13

In attributes sampling,the risk of incorrect rejection deals with which of the following?

Accepted Answer

A) Effectiveness. 
B) Efficiency. 
C) Reliability. 
D) Both A and B. 
A) Effectiveness. 
B) Efficiency. 
C) Reliability. 
D) Both A and B.

Question 14

Sample size in a MUS sample is a function of risk of incorrect acceptance,tolerable misstatement,and expected misstatement.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not an item the auditor needs to determine in designing sampling for substantive testing?

Accepted Answer

A) The audit objective. 
B) The method of selecting a sample. 
C) Expected misstatement conditions. 
D) Expected deviation rate. 
A) The audit objective. 
B) The method of selecting a sample. 
C) Expected misstatement conditions. 
D) Expected deviation rate.

Question 16

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

Accepted Answer

A) Tolerable failure rate. 
B) Allowable risk of assessing control risk too low. 
C) Expected failure rate. 
D) Allowance for sampling error. 
A) Tolerable failure rate. 
B) Allowable risk of assessing control risk too low. 
C) Expected failure rate. 
D) Allowance for sampling error.

Question 17

In testing account balances,haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

Accepted Answer

A) Statistically sound. 
B) Representative of the population. 
C) Representative of the sample. 
D) In the upper stratum. 
A) Statistically sound. 
B) Representative of the population. 
C) Representative of the sample. 
D) In the upper stratum.

Question 18

MUS is designed to test for which of the following?

Accepted Answer

A) Overstatements. 
B) Understatements. 
C) Neither understatements nor overstatements. 
D) Either understatements or overstatements. 
A) Overstatements. 
B) Understatements. 
C) Neither understatements nor overstatements. 
D) Either understatements or overstatements.

Question 19

Using attributes sampling the auditor can test for multiple attributes using the same source documents.

Accepted Answer

A) True 
 B)False

Question 20

Attributes sampling is used in which of the following situations?

Accepted Answer

A) Testing rates of deviations of controls. 
B) Testing the reasonableness of account balances. 
C) Testing accuracy of estimates in accounts. 
D) Both A and B. 
A) Testing rates of deviations of controls. 
B) Testing the reasonableness of account balances. 
C) Testing accuracy of estimates in accounts. 
D) Both A and B.

Which one of the following issues need not be addressed when planning an audit sample to test control procedures?

The individual auditable elements defined by the auditor are the sampling units.

The most common statistical approaches for substantive testing are classical variables sampling and MUS.

The population for MUS is defined as the number of dollars in the population being tested.

Which of the following describes sampling risk?

Random sampling can be used even if the auditor does not plan on using statistical sampling.

By using data analytics tools,the auditor can potentially audit the whole population rather than taking a sample.

Audit sampling implies the gathering of evidence to use as a basis for making valid inferences about the characteristics of the population as a whole without examining every transaction.

Population items with zero balances have no chance of being selected using PPS sampling.

Monetary unit sampling (MUS)is designed to test whether there is an acceptable risk of account balance understatement.

Risks of sampling in tests of controls Define the following terms as they relate to sampling for tests of controls: 1. tolerable failure rate 2. expected failure rate

The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?

In attributes sampling,the risk of incorrect rejection deals with which of the following?

Sample size in a MUS sample is a function of risk of incorrect acceptance,tolerable misstatement,and expected misstatement.

Which of the following is not an item the auditor needs to determine in designing sampling for substantive testing?

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

In testing account balances,haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

MUS is designed to test for which of the following?

Using attributes sampling the auditor can test for multiple attributes using the same source documents.

Attributes sampling is used in which of the following situations?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters

Exam 8: Specialized Audit Tools: Sampling and Generalized Audit Software

Which one of the following issues need not be addressed when planning an audit sample to test control procedures?

The individual auditable elements defined by the auditor are the sampling units.

The most common statistical approaches for substantive testing are classical variables sampling and MUS.

The population for MUS is defined as the number of dollars in the population being tested.

Which of the following describes sampling risk?

Random sampling can be used even if the auditor does not plan on using statistical sampling.

By using data analytics tools,the auditor can potentially audit the whole population rather than taking a sample.

Audit sampling implies the gathering of evidence to use as a basis for making valid inferences about the characteristics of the population as a whole without examining every transaction.

Population items with zero balances have no chance of being selected using PPS sampling.

Monetary unit sampling (MUS)is designed to test whether there is an acceptable risk of account balance understatement.

Risks of sampling in tests of controls Define the following terms as they relate to sampling for tests of controls: 1. tolerable failure rate 2. expected failure rate

The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?

In attributes sampling,the risk of incorrect rejection deals with which of the following?

Sample size in a MUS sample is a function of risk of incorrect acceptance,tolerable misstatement,and expected misstatement.

Which of the following is not an item the auditor needs to determine in designing sampling for substantive testing?

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

In testing account balances,haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

MUS is designed to test for which of the following?

Using attributes sampling the auditor can test for multiple attributes using the same source documents.

Attributes sampling is used in which of the following situations?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters