Question 1

Which of the following is an internal control procedure?

Accepted Answer

A) segregation of duties 
B) policies and procedures 
C) documented transaction trails 
D) independent recalculations 
E) relevant controls that limit access to assets
F)both A and C
G)both B and D
H)both D and E 
A) segregation of duties 
B) policies and procedures 
C) documented transaction trails 
D) independent recalculations 
E) relevant controls that limit access to assets
F)both A and C
G)both B and D
H)both D and E F

Question 2

To use systematic random sampling

Accepted Answer

A) the auditor divides the number of units in the population by the sample size to calculate the sampling interval 
B) the auditor divides the number of units in the sample size by the population to calculate the sampling interval 
C) the auditor divides the number of units in the population by the sample size to calculate the deviation interval 
D) the auditor divides the number of units in the sample size by the population to calculate the deviation interval 
A) the auditor divides the number of units in the population by the sample size to calculate the sampling interval 
B) the auditor divides the number of units in the sample size by the population to calculate the sampling interval 
C) the auditor divides the number of units in the population by the sample size to calculate the deviation interval 
D) the auditor divides the number of units in the sample size by the population to calculate the deviation interval A

Question 3

The most important points to understand about gathering evidence based on sampling procedures are:

Accepted Answer

A) when to use a sample to confirm evidence 
B) how to observe a random sample for the test 
C) how to validate the audit test 
D) how to evaluate the deviations found in the sample 
E) how to use the sample results to arrive at a conclusion about the population
F)both A and B
G)both B and C
H)both D and E 
A) when to use a sample to confirm evidence 
B) how to observe a random sample for the test 
C) how to validate the audit test 
D) how to evaluate the deviations found in the sample 
E) how to use the sample results to arrive at a conclusion about the population
F)both A and B
G)both B and C
H)both D and E H

Question 4

The basic question to be answered in an internal control test is

Accepted Answer

A) whether the control has been placed in operation 
B) whether the control is a new one 
C) whether the control works 
D) whether the control is operating efficiently 
A) whether the control has been placed in operation 
B) whether the control is a new one 
C) whether the control works 
D) whether the control is operating efficiently

Question 5

If the internal control being tested is management's signature on a purchase order to authorize the purchase,then the signature is the characteristic of interest.

Accepted Answer

A) True 
 B)False

Question 6

For internal control testing related to a financial reporting process,the population is usually

Accepted Answer

A) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective for the year 
B) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective at the end of the year 
C) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective during the year 
D) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective at the beginning of the year 
A) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective for the year 
B) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective at the end of the year 
C) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective during the year 
D) all items in the class of transactions or account balance that the auditor feels are necessary to determine whether controls are effective at the beginning of the year

Question 7

Which of the following is an internal control procedure?

Accepted Answer

A) segregation of controls 
B) policies and procedures 
C) documented transaction trails 
D) independent recalculations 
E) physical controls that limit access to assets
F)both A and B
G)both C and E
H)both D and E 
A) segregation of controls 
B) policies and procedures 
C) documented transaction trails 
D) independent recalculations 
E) physical controls that limit access to assets
F)both A and B
G)both C and E
H)both D and E

Question 8

The most important points to understand about gathering evidence based on sampling procedures are:

Accepted Answer

A) when to use a sample to gather evidence 
B) how to observe a random sample for the test 
C) how to perform the audit test 
D) how to observe the deviations found in the sample 
E) how to use the sample results to arrive at an assumption about the population
F)both A and C
G)both A and E
H)both B and D 
A) when to use a sample to gather evidence 
B) how to observe a random sample for the test 
C) how to perform the audit test 
D) how to observe the deviations found in the sample 
E) how to use the sample results to arrive at an assumption about the population
F)both A and C
G)both A and E
H)both B and D

Question 9

The auditor should consider which of the following factors in selecting the correct sample size?

Accepted Answer

A) More testing will be required for automated controls than manual controls because automated controls are prone to computer errors.IT controls that have been tested should continue to be reliable. 
B) The more frequently a control is performed,the more items are tested.More internal control tests are performed for controls that are performed daily than for controls performed monthly. 
C) The more assurance we receive from other audit procedures,the more the control is tested. 
D) The more susceptible the control is to management override,the more the control is tested. 
E) The more transactions in a system,the more items need to be tested.
F)both A and C
G)both A and E
H)Both B and D 
A) More testing will be required for automated controls than manual controls because automated controls are prone to computer errors.IT controls that have been tested should continue to be reliable. 
B) The more frequently a control is performed,the more items are tested.More internal control tests are performed for controls that are performed daily than for controls performed monthly. 
C) The more assurance we receive from other audit procedures,the more the control is tested. 
D) The more susceptible the control is to management override,the more the control is tested. 
E) The more transactions in a system,the more items need to be tested.
F)both A and C
G)both A and E
H)Both B and D

Question 10

Which of the following statements is a correct statement about haphazard sampling?

Accepted Answer

A) the sample is selected without any conscious bias. 
B) haphazard sampling can be used for either statistical or non-statistical sampling. 
C) haphazard sampling may be used when items in the population are not prenumbered documents. 
D) haphazard sampling must be used when items in the population are not prenumbered documents. 
E) haphazard sampling can only be used for statistical sampling.
F)both A and C
G)both A and D
H)both B and E 
A) the sample is selected without any conscious bias. 
B) haphazard sampling can be used for either statistical or non-statistical sampling. 
C) haphazard sampling may be used when items in the population are not prenumbered documents. 
D) haphazard sampling must be used when items in the population are not prenumbered documents. 
E) haphazard sampling can only be used for statistical sampling.
F)both A and C
G)both A and D
H)both B and E

Question 11

One of the limitations of a fixed sampling plan is that

Accepted Answer

A) the assessed level of control risk as planned cannot be changed 
B) the assessed level of inherent risk as planned cannot be changed 
C) the sample either passes or fails at the conclusion of testing 
D) any deviations in the sample require the sample to fail 
A) the assessed level of control risk as planned cannot be changed 
B) the assessed level of inherent risk as planned cannot be changed 
C) the sample either passes or fails at the conclusion of testing 
D) any deviations in the sample require the sample to fail

Question 12

According to the auditing standards (AU 350 and ISA 530)

Accepted Answer

A) the auditor must document why he did not use statistical sampling 
B) the auditor must document why he decided to use nonstatistical sampling 
C) evidence gathered by nonstatistical sampling is more reliable than evidence gathered by statistical sampling 
D) the auditor can choose to use either statistical or nonstatistical sampling 
A) the auditor must document why he did not use statistical sampling 
B) the auditor must document why he decided to use nonstatistical sampling 
C) evidence gathered by nonstatistical sampling is more reliable than evidence gathered by statistical sampling 
D) the auditor can choose to use either statistical or nonstatistical sampling

Question 13

You have documented the internal control system for cash and have written a memo describing the controls that are in place.There are several internal control procedures available to management in designing an internal control system.Identify the internal controls that management has used based on the documentation provided below.Write a short description after each identified control indicating what audit procedures you would use to test the control.

Accepted Answer

•Mary receives cash for the BCS Company

Question 14

The auditor should consider which of the following factors in selecting the correct sample size?

Accepted Answer

A) More testing will be required for manual controls than automated controls because manual controls are more prone to human error.IT controls that have been tested should continue to be reliable. 
B) The more frequently a control is performed,the more items are tested.More internal control tests are performed for controls that are performed daily than for controls performed monthly. 
C) The more assurance we receive from other audit procedures,the less the control is tested. 
D) The more susceptible the control is to management override,the more the control is tested. 
E) both A and B
F)both B and C
G)both C and D 
A) More testing will be required for manual controls than automated controls because manual controls are more prone to human error.IT controls that have been tested should continue to be reliable. 
B) The more frequently a control is performed,the more items are tested.More internal control tests are performed for controls that are performed daily than for controls performed monthly. 
C) The more assurance we receive from other audit procedures,the less the control is tested. 
D) The more susceptible the control is to management override,the more the control is tested. 
E) both A and B
F)both B and C
G)both C and D

Question 15

Nonsampling risk includes

Accepted Answer

A) all aspects of audit risk that are not related to sampling 
B) all aspects of audit risk that are related to sampling 
C) all aspects of control risk that are not related to sampling 
D) all aspects of control risk that are related to sampling 
A) all aspects of audit risk that are not related to sampling 
B) all aspects of audit risk that are related to sampling 
C) all aspects of control risk that are not related to sampling 
D) all aspects of control risk that are related to sampling

Question 16

If the sample deviation rate is lower than the tolerable deviation rate,the auditor will

Accepted Answer

A) reduce the amount of control testing 
B) assume controls are not working 
C) assume the controls are working 
D) reduce the amount of substantive testing 
E) increase the amount of substantive testing
F)both A and C
G)both B and E
H)Both C and D 
A) reduce the amount of control testing 
B) assume controls are not working 
C) assume the controls are working 
D) reduce the amount of substantive testing 
E) increase the amount of substantive testing
F)both A and C
G)both B and E
H)Both C and D

Question 17

With nonstatistical sampling,sampling risk is controlled by

Accepted Answer

A) quantifying sampling risk to keep the risk to an acceptable number 
B) quantifying control risk to keep the risk to an acceptable number 
C) selecting smaller sample sizes 
D) taking a random sample so the sample is representative of the population 
E) evaluating sample results to consider control risk in the evaluation of the results 
A) quantifying sampling risk to keep the risk to an acceptable number 
B) quantifying control risk to keep the risk to an acceptable number 
C) selecting smaller sample sizes 
D) taking a random sample so the sample is representative of the population 
E) evaluating sample results to consider control risk in the evaluation of the results

Question 18

Sampling risk for tests of controls includes

Accepted Answer

A) the risk of assessing inherent risk too high 
B) the risk of assessing control risk too high 
C) the risk of assessing control risk too low 
D) the risk of assessing inherent risk too low 
E) the risk of assessing audit risk too high
F)Both B and C 
A) the risk of assessing inherent risk too high 
B) the risk of assessing control risk too high 
C) the risk of assessing control risk too low 
D) the risk of assessing inherent risk too low 
E) the risk of assessing audit risk too high
F)Both B and C

Question 19

Which of the following internal control procedures are tested by sampling?

Accepted Answer

A) segregation of duties 
B) authorization procedures 
C) documented transaction trails 
D) independent recalculations 
E) physical controls that limit access to assets
F)both A and C
G)both B and C
H)both D and E 
A) segregation of duties 
B) authorization procedures 
C) documented transaction trails 
D) independent recalculations 
E) physical controls that limit access to assets
F)both A and C
G)both B and C
H)both D and E

Question 20

The auditor should consider which of the following factors in selecting the correct sample size?

Accepted Answer

A) More testing will be required for manual controls than automated controls because manual controls are more prone to human error.IT controls that have been tested should continue to be reliable. 
B) The more transactions in a system,the more items need to be tested. 
C) The more assurance we receive from other audit procedures,the more the control is tested. 
D) The less susceptible the control is to management override,the more the control is tested. 
E) The more frequently a control is performed,the more items are tested.More internal control tests are performed for controls that are performed daily than for controls performed monthly.
F)both A and C
G)both A and E 
A) More testing will be required for manual controls than automated controls because manual controls are more prone to human error.IT controls that have been tested should continue to be reliable. 
B) The more transactions in a system,the more items need to be tested. 
C) The more assurance we receive from other audit procedures,the more the control is tested. 
D) The less susceptible the control is to management override,the more the control is tested. 
E) The more frequently a control is performed,the more items are tested.More internal control tests are performed for controls that are performed daily than for controls performed monthly.
F)both A and C
G)both A and E

Which of the following is an internal control procedure?

To use systematic random sampling

The most important points to understand about gathering evidence based on sampling procedures are:

The basic question to be answered in an internal control test is

If the internal control being tested is management's signature on a purchase order to authorize the purchase,then the signature is the characteristic of interest.

For internal control testing related to a financial reporting process,the population is usually

Which of the following is an internal control procedure?

The most important points to understand about gathering evidence based on sampling procedures are:

The auditor should consider which of the following factors in selecting the correct sample size?

Which of the following statements is a correct statement about haphazard sampling?

One of the limitations of a fixed sampling plan is that

According to the auditing standards (AU 350 and ISA 530)

The auditor should consider which of the following factors in selecting the correct sample size?

Nonsampling risk includes

If the sample deviation rate is lower than the tolerable deviation rate,the auditor will

With nonstatistical sampling,sampling risk is controlled by

Sampling risk for tests of controls includes

Which of the following internal control procedures are tested by sampling?

The auditor should consider which of the following factors in selecting the correct sample size?

What Is Auditing

The Audit Planning Process: Understanding the Risk of Material Misstatement

Internal Controls

Auditing the Revenue Business Process

Audit Evidence and the Auditors Responsibility for Fraud Detection

Auditing the Acquisition and Expenditure Business Process

Auditing the Inventory Business Process

Audit Sampling: Substantive Tests of Details

Cash and Investment Business Processes

Long-Term Debt and Owners Equity Business Process

Completing the Audit

Audit Reports

The Auditing Profession Glossary

Filters

Exam 8: Audit Sampling: Tests of Internal Controls

Which of the following is an internal control procedure?

To use systematic random sampling

The most important points to understand about gathering evidence based on sampling procedures are:

The basic question to be answered in an internal control test is

If the internal control being tested is management's signature on a purchase order to authorize the purchase,then the signature is the characteristic of interest.

For internal control testing related to a financial reporting process,the population is usually

Which of the following is an internal control procedure?

The most important points to understand about gathering evidence based on sampling procedures are:

The auditor should consider which of the following factors in selecting the correct sample size?

Which of the following statements is a correct statement about haphazard sampling?

One of the limitations of a fixed sampling plan is that

According to the auditing standards (AU 350 and ISA 530)

The auditor should consider which of the following factors in selecting the correct sample size?

Nonsampling risk includes

If the sample deviation rate is lower than the tolerable deviation rate,the auditor will

With nonstatistical sampling,sampling risk is controlled by

Sampling risk for tests of controls includes

Which of the following internal control procedures are tested by sampling?

The auditor should consider which of the following factors in selecting the correct sample size?

What Is Auditing

The Audit Planning Process: Understanding the Risk of Material Misstatement

Internal Controls

Auditing the Revenue Business Process

Audit Evidence and the Auditors Responsibility for Fraud Detection

Auditing the Acquisition and Expenditure Business Process

Auditing the Inventory Business Process

Audit Sampling: Substantive Tests of Details

Cash and Investment Business Processes

Long-Term Debt and Owners Equity Business Process

Completing the Audit

Audit Reports

The Auditing Profession Glossary

Filters