Exam 8: Tools Used in Gathering Audit Evidence

Sample selection Before procedures using statistical or nonstatistical sampling methods begin,the auditor must determine how the sample will be selected.Discuss the various types of sample selection,when they are used and,generally,how they are used.Give examples.

Free

(Essay)

4.7/5

(40)

Question 1

Correct Answer:

Verified

Random number selection
Random number selection is an efficient use of sample selection if random numbers can be related to the population.An example of this is in sampling customer invoices that are sequentially numbered.The sequence can be used as the range for random number selection.Random selection is known to be representative of the population and is required for statistical sampling methods.
Systematic selection
Systematic selection is also a random technique and is acceptable for statistical methods.It is used when sequential numbering is not used in the population or is difficult to use for sampling.An example of this is in sampling inventory for valuation.If the database table keeps inventory items by a unique product number that has alphanumeric characters,then the product number can be used with systematic selection.However,in order to use systematic selection the auditor must (a)establish that the population is complete,and (b)be sure that there is not a systematic pattern in the population.An interval must be used to sample every nth item in the population.Every item in the population then has an equal chance of being selected.
Haphazard selection
Items may be arbitrarily selected from the population using no conscious basis.This haphazard selection process is not considered random and is not used in statistical methods.
Block sampling
Similar to haphazard selection,the auditor may wish to select all transaction in a given day or week.This selection process may not give the auditor the representation of the transactions as they occurred for a more extended period of time.

Sampling factors List the four important decisions an auditor must make when deciding to use sampling.

Free

(Essay)

4.8/5

(38)

Question 2

Correct Answer:

Verified

When deciding to use sampling techniques the auditor must decide the following:
Population - Which population should be tested and for what characteristics?
Sample size - How many items should be selected for audit testing?
Selection - Wrichitems should be inclucled in the s ample?
Evaluation - Whatinferences can be made about the overall population from the sample?

In Attribute Sampling if the achieved upper limit exceeds the tolerable rate the auditor can rely upon the control as working.

Free

(True/False)

4.9/5

(39)

Question 3

Correct Answer:

Verified

False

Using MUS sampling Under what conditions would an auditor choose to use MUS sampling?

(Essay)

4.9/5

(42)

Question 4

The risk of incorrect acceptance of an account balance as correct,when in fact it is not correct,bears directly on the effectiveness of an audit.

(True/False)

4.9/5

(29)

Question 5

An auditor uses sampling to determine the reasonableness of an account balance by performing detailed analysis of items making up the account balance.

(True/False)

4.9/5

(36)

Question 6

Statistical sampling is used when an auditor chooses to examine all purchases of equipment exceeding $1,000.00 and to test the remaining items by analytical procedures.

(True/False)

4.9/5

(27)

Question 7

Which one of the following is not a decision the auditor needs to make about attribute sampling?

(Multiple Choice)

4.9/5

(45)

Question 8

Statistical sampling assists auditors in determining the sufficiency of evidence gathered.

(True/False)

4.9/5

(38)

Question 9

Which one of the following is not a typical step used to implement an attribute estimation sampling plan?

(Multiple Choice)

4.8/5

(31)

Question 10

Probability proportional to size sampling is designed to test for overstatement of an account balance while classical variable methods are designed to test for

(Multiple Choice)

4.9/5

(41)

Question 11

An example of sampling an attribute includes testing a purchase order for the proper signature.

(True/False)

4.8/5

(40)

Question 12

Extracting data from the client's computer system is one of the tasks performed by GAS.

(True/False)

4.8/5

(35)

Question 13

The sample size varies directly with

(Multiple Choice)

4.9/5

(38)

Question 14

While auditors may use either statistical or nonstatistical sampling,some auditors restrict the use of nonstatistical sampling mainly because it is

(Multiple Choice)

5.0/5

(35)

Question 15

The design of a MUS sample requires the auditor to determine all of the following except

(Multiple Choice)

4.8/5

(42)

Question 16

Statistical sampling is best known for combining

(Multiple Choice)

4.9/5

(33)

Question 17

Nonstatistical samples should be based on the same audit considerations as those used for statistical sampling.

(True/False)

4.7/5

(32)

Question 18

Control risk that is assessed excessively high leads to:

(Multiple Choice)

4.9/5

(37)

Question 19

In MUS sampling,the formula for the sampling interval is

(Multiple Choice)

4.9/5

(35)

Question 20

Showing 1 - 20 of 108

Sample selection Before procedures using statistical or nonstatistical sampling methods begin,the auditor must determine how the sample will be selected.Discuss the various types of sample selection,when they are used and,generally,how they are used.Give examples.

Sampling factors List the four important decisions an auditor must make when deciding to use sampling.

In Attribute Sampling if the achieved upper limit exceeds the tolerable rate the auditor can rely upon the control as working.

Using MUS sampling Under what conditions would an auditor choose to use MUS sampling?

The risk of incorrect acceptance of an account balance as correct,when in fact it is not correct,bears directly on the effectiveness of an audit.

An auditor uses sampling to determine the reasonableness of an account balance by performing detailed analysis of items making up the account balance.

Statistical sampling is used when an auditor chooses to examine all purchases of equipment exceeding $1,000.00 and to test the remaining items by analytical procedures.

Which one of the following is not a decision the auditor needs to make about attribute sampling?

Statistical sampling assists auditors in determining the sufficiency of evidence gathered.

Which one of the following is not a typical step used to implement an attribute estimation sampling plan?

Probability proportional to size sampling is designed to test for overstatement of an account balance while classical variable methods are designed to test for

An example of sampling an attribute includes testing a purchase order for the proper signature.

Extracting data from the client's computer system is one of the tasks performed by GAS.

The sample size varies directly with

While auditors may use either statistical or nonstatistical sampling,some auditors restrict the use of nonstatistical sampling mainly because it is

The design of a MUS sample requires the auditor to determine all of the following except

Statistical sampling is best known for combining

Nonstatistical samples should be based on the same audit considerations as those used for statistical sampling.

Control risk that is assessed excessively high leads to:

In MUS sampling,the formula for the sampling interval is

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Auditing for Fraud

Auditing Revenue and Related Accounts

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Ensuring Audit Quality in Completing the Audit

Auditors Reports

Professional Liability

Advanced Topics Concerning Complex Audit Judgments

Filters