Question 1

Explain sampling risk as it relates to both tests of controls and substantive procedures.

Accepted Answer

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population of transactions or items within an account balance available for testing and,as a consequence,the auditor arrives at an inappropriate conclusion.When testing controls,sampling risk is the risk that an auditor relies on their client's system of internal controls when they should not do so (that is,the auditor concludes that their client's internal controls are effective when they are ineffective),and the risk that an auditor concludes that their client's internal controls are less reliable than they really are (that is,the auditor concludes that their client's internal controls are ineffective when they are effective).When conducting substantive tests,sampling risk is the risk that an auditor concludes that a material misstatement does not exist when it does or an auditor concludes that a material misstatement exists when it does not.

Question 2

The timing of audit testing refers to the stage of the audit when procedures are performed and the date that audit evidence relates to.

Accepted Answer

A) True 
 B)False  True

Question 3

An audit program includes the audit procedures to be used when testing controls and when conducting detailed substantive audit procedures.

Accepted Answer

A) True 
 B)False  True

Question 4

For high-risk accounts,the timing of most audit procedures will be:

Accepted Answer

A) at,or after,year-end 
B) before year end 
C) whenever the client says it is most convenient for them to be conducted 
D) during the interim audit testing stage 
A) at,or after,year-end 
B) before year end 
C) whenever the client says it is most convenient for them to be conducted 
D) during the interim audit testing stage

Question 5

Tests of controls are audit procedures designed to detect material misstatements at the assertion level.

Accepted Answer

A) True 
 B)False

Question 6

When conducting substantive testing,which of the following is not a factor that influences the sample size?

Accepted Answer

A) an increase in the auditor's assessment of the risk of material misstatement 
B) stratification of the population when appropriate 
C) an increase in the tolerable rate of deviation 
D) an increase in tolerable misstatement 
A) an increase in the auditor's assessment of the risk of material misstatement 
B) stratification of the population when appropriate 
C) an increase in the tolerable rate of deviation 
D) an increase in tolerable misstatement

Question 7

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing.

Accepted Answer

A) True 
 B)False

Question 8

If an auditor decides that a client has internal controls that can reduce the likelihood of a material misstatement for an identified risk,the auditor will:

Accepted Answer

A) qualify the audit report 
B) adopt a predominantly substantive approach 
C) test those controls 
D) not test those controls 
A) qualify the audit report 
B) adopt a predominantly substantive approach 
C) test those controls 
D) not test those controls

Question 9

Which of the following statements is in?

Accepted Answer

A) an auditor may decide to stratify the population before selecting a sample from it 
B) an auditor will use their professional judgement to determine the tolerable error and required level of confidence 
C) when detection risk is set as high,an auditor will require a high level of confidence that the transactions and accounts are not materially misstated 
D) an auditor will use their professional judgement when considering what would be considered an error within the population tested 
A) an auditor may decide to stratify the population before selecting a sample from it 
B) an auditor will use their professional judgement to determine the tolerable error and required level of confidence 
C) when detection risk is set as high,an auditor will require a high level of confidence that the transactions and accounts are not materially misstated 
D) an auditor will use their professional judgement when considering what would be considered an error within the population tested

Question 10

Explain how auditors evaluate the results of tests of controls conducted on a sample.

Accepted Answer

After an auditor has completed their aud

Question 11

Identify and explain the factors that influence the sample size for tests of controls.

Accepted Answer

There are a number of factors that will

Question 12

Which of the following statements regarding statistical sampling is ?

Accepted Answer

A) it involves haphazard selection 
B) it is generally used for low risk accounts 
C) it is easier to use than non-statistical sampling 
D) it involves random selection 
A) it involves haphazard selection 
B) it is generally used for low risk accounts 
C) it is easier to use than non-statistical sampling 
D) it involves random selection

Question 13

When testing controls,a decrease in the sample size will occur when there is:

Accepted Answer

A) a decrease in the tolerable rate of deviation 
B) an increase in the extent to which the auditor's risk assessment takes into account relevant controls 
C) an increase in the tolerable rate of deviation 
D) an increase in the number of sampling units in the population 
A) a decrease in the tolerable rate of deviation 
B) an increase in the extent to which the auditor's risk assessment takes into account relevant controls 
C) an increase in the tolerable rate of deviation 
D) an increase in the number of sampling units in the population

Question 14

Block selection involves the selection of items that are grouped together within the population of items available.

Accepted Answer

A) True 
 B)False

Question 15

Describe the major types of sampling techniques available to auditors.

Accepted Answer

There are a range of sampling techniques

Question 16

Why do auditors inspect records and documents?

Accepted Answer

A) For evidence that management have authorised significant purchases 
B) To check that a transaction occurred 
C) To check the dates of transactions 
D) All of the above 
A) For evidence that management have authorised significant purchases 
B) To check that a transaction occurred 
C) To check the dates of transactions 
D) All of the above

Question 17

An auditor uses their professional judgement when determining the nature,timing and extent of audit procedures to use for each audit.Explain why the nature,timing and extent of audit testing are crucial factors in every audit.

Accepted Answer

The nature, timing, and extent of audit

Question 18

When testing controls,non-sampling risk is the risk that an auditor:

Accepted Answer

A) does not select a sample 
B) both a and b 
C) designs tests that are ineffective 
D) none of the above 
A) does not select a sample 
B) both a and b 
C) designs tests that are ineffective 
D) none of the above

Question 19

What impact will there be on sample size when there is an increase in the number of sampling units in the population?

Accepted Answer

A) decrease 
B) negligible 
C) increase 
D) none of the above 
A) decrease 
B) negligible 
C) increase 
D) none of the above

Question 20

When auditors conclude that an internal control is effective,they will rely on the control to prevent and detect a material misstatement and reduce their detailed substantive procedures.

Accepted Answer

A) True 
 B)False

Explain sampling risk as it relates to both tests of controls and substantive procedures.

The timing of audit testing refers to the stage of the audit when procedures are performed and the date that audit evidence relates to.

An audit program includes the audit procedures to be used when testing controls and when conducting detailed substantive audit procedures.

For high-risk accounts,the timing of most audit procedures will be:

Tests of controls are audit procedures designed to detect material misstatements at the assertion level.

When conducting substantive testing,which of the following is not a factor that influences the sample size?

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing.

If an auditor decides that a client has internal controls that can reduce the likelihood of a material misstatement for an identified risk,the auditor will:

Which of the following statements is in?

Explain how auditors evaluate the results of tests of controls conducted on a sample.

Identify and explain the factors that influence the sample size for tests of controls.

Which of the following statements regarding statistical sampling is ?

When testing controls,a decrease in the sample size will occur when there is:

Block selection involves the selection of items that are grouped together within the population of items available.

Describe the major types of sampling techniques available to auditors.

Why do auditors inspect records and documents?

An auditor uses their professional judgement when determining the nature,timing and extent of audit procedures to use for each audit.Explain why the nature,timing and extent of audit testing are crucial factors in every audit.

When testing controls,non-sampling risk is the risk that an auditor:

What impact will there be on sample size when there is an increase in the number of sampling units in the population?

When auditors conclude that an internal control is effective,they will rely on the control to prevent and detect a material misstatement and reduce their detailed substantive procedures.

Introduction and Overview of Audit and Assurance

Ethics,legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audit Testing of Controls

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 7: Sampling and Overview of the Risk Response Phase of the Audit

Explain sampling risk as it relates to both tests of controls and substantive procedures.

The timing of audit testing refers to the stage of the audit when procedures are performed and the date that audit evidence relates to.

An audit program includes the audit procedures to be used when testing controls and when conducting detailed substantive audit procedures.

For high-risk accounts,the timing of most audit procedures will be:

Tests of controls are audit procedures designed to detect material misstatements at the assertion level.

When conducting substantive testing,which of the following is not a factor that influences the sample size?

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing.

If an auditor decides that a client has internal controls that can reduce the likelihood of a material misstatement for an identified risk,the auditor will:

Which of the following statements is in?

Explain how auditors evaluate the results of tests of controls conducted on a sample.

Identify and explain the factors that influence the sample size for tests of controls.

Which of the following statements regarding statistical sampling is ?

When testing controls,a decrease in the sample size will occur when there is:

Block selection involves the selection of items that are grouped together within the population of items available.

Describe the major types of sampling techniques available to auditors.

Why do auditors inspect records and documents?

An auditor uses their professional judgement when determining the nature,timing and extent of audit procedures to use for each audit.Explain why the nature,timing and extent of audit testing are crucial factors in every audit.

When testing controls,non-sampling risk is the risk that an auditor:

What impact will there be on sample size when there is an increase in the number of sampling units in the population?

When auditors conclude that an internal control is effective,they will rely on the control to prevent and detect a material misstatement and reduce their detailed substantive procedures.

Introduction and Overview of Audit and Assurance

Ethics,legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audit Testing of Controls

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters