Exam 17: Audit Sampling for Tests of Details and Balances

Explore all topics

Discuss each of the six possible courses of action the auditor can take when he or she has concluded that the population is misstated by more than a tolerable amount.

(Essay)

4.8/5

(37)

Question 41

In monetary-unit sampling, the likelihood of high dollar items from the population being included in the sample is lower than the likelihood for small dollar items.

(True/False)

4.9/5

(37)

Question 42

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

(True/False)

4.7/5

(41)

Question 43

In difference estimation sampling, the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.

(True/False)

4.9/5

(32)

Question 44

Which of the following is not a problem with monetary-unit selection?

(Multiple Choice)

4.7/5

(32)

Question 45

Consider the steps in sampling for tests of details and for tests of controls. Explain the differences in applying sampling to these two types of tests.

(Essay)

4.9/5

(32)

Question 46

Explain why monetary-unit sampling, or probability proportional to size sampling, is not useful for detecting understatements.

(Essay)

4.8/5

(43)

Question 47

Based on the information presented above, you are to indicate for the specified case from the table the required sample size to be selected from population 1 relative to the sample from population 2. In case 5, the required sample from population 1 is:

(Multiple Choice)

4.7/5

(34)

Question 48

Acceptable audit risk (AAR) and acceptable risk of incorrect acceptance (ARIA) are inversely related; that is, as AAR increases, ARIA decreases.

(True/False)

4.8/5

(34)

Question 49

Monetary-unit sampling is not particularly effective at detecting:

(Multiple Choice)

4.7/5

(43)

Question 50

The use of monetary-unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

(True/False)

4.8/5

(31)

Question 51

There are seven steps to calculate adjusted misstatement bounds when both overstatement and understatement errors are discovered in monetary-unit sampling. Step one is "Determine misstatement for each sample item, keeping overstatements and understatements separate." Discuss three of the remaining six steps.

(Essay)

5.0/5

(32)

Question 52

In monetary-unit sampling, the values of the estimated likely maximum misstatements are referred to as the:

(Multiple Choice)

4.9/5

(41)

Question 53

How might auditors include negative balances when using monetary-unit sampling to evaluate a population?

(Essay)

4.9/5

(42)

Question 54

The primary factor affecting the auditor's acceptable risk of incorrect acceptance is assessed as inherent risk when quantifying audit risk.

(True/False)

4.9/5

(46)

Question 55

Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

(True/False)

4.8/5

(36)

Question 56

Use of the ratio estimation sampling technique to estimated dollar amounts is inappropriate when:

(Multiple Choice)

4.8/5

(41)

Question 57

An auditor uses monetary unit sampling with a sampling interval of $20,000 and detects an item with a recorded amount of $10,000 with an audited value of $4,000. The projected misstatement of the sample is:

(Multiple Choice)

4.8/5

(35)

Question 58

PPS samples can be obtained in an efficient manner using all but which of the following?

(Multiple Choice)

4.7/5

(38)

Question 59

The risk of incorrect rejection is important only when there is a ________ cost to increasing the sample size.

(Multiple Choice)

4.9/5

(37)

Question 60

Showing 41 - 60 of 114

Exam 17: Audit Sampling for Tests of Details and Balances

Discuss each of the six possible courses of action the auditor can take when he or she has concluded that the population is misstated by more than a tolerable amount.

In monetary-unit sampling, the likelihood of high dollar items from the population being included in the sample is lower than the likelihood for small dollar items.

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

In difference estimation sampling, the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.

Which of the following is not a problem with monetary-unit selection?

Consider the steps in sampling for tests of details and for tests of controls. Explain the differences in applying sampling to these two types of tests.

Explain why monetary-unit sampling, or probability proportional to size sampling, is not useful for detecting understatements.

Based on the information presented above, you are to indicate for the specified case from the table the required sample size to be selected from population 1 relative to the sample from population 2. In case 5, the required sample from population 1 is:

Acceptable audit risk (AAR) and acceptable risk of incorrect acceptance (ARIA) are inversely related; that is, as AAR increases, ARIA decreases.

Monetary-unit sampling is not particularly effective at detecting:

The use of monetary-unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

In monetary-unit sampling, the values of the estimated likely maximum misstatements are referred to as the:

How might auditors include negative balances when using monetary-unit sampling to evaluate a population?

The primary factor affecting the auditor's acceptable risk of incorrect acceptance is assessed as inherent risk when quantifying audit risk.

Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

Use of the ratio estimation sampling technique to estimated dollar amounts is inappropriate when:

An auditor uses monetary unit sampling with a sampling interval of $20,000 and detects an item with a recorded amount of $10,000 with an audited value of $4,000. The projected misstatement of the sample is:

PPS samples can be obtained in an efficient manner using all but which of the following?

The risk of incorrect rejection is important only when there is a ________ cost to increasing the sample size.

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

The CPA Profession

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit of the Acquisition and Payment Cycle: Tests of Controls and Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters