Exam 17: Audit Sampling for Tests of Details and Balances

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If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?

(Multiple Choice)

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Question 81

If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance:

(Multiple Choice)

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Question 82

The most important difference among tests of controls, substantive tests of transactions, and tests of details of balances lies in what the auditor wants to measure. Explain what each type of test attempts to measure.

(Essay)

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Question 83

The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:

(Multiple Choice)

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Question 84

The statistical results when Monetary-Unit Sampling (MUS) is used are called exception bounds.

(True/False)

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Question 85

Your audit sampling program states: the upper misstatement limit is $13,200 and the risk of incorrect acceptance is at the 95% confidence level. This means:

(Multiple Choice)

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Question 86

When selecting a stratified sample, the sample size is:

(Multiple Choice)

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Question 87

In monetary-unit sampling, the relationship between tolerable misstatement size and required sample size is:

(Multiple Choice)

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Question 88

Discuss the advantages and disadvantages of monetary-unit sampling over other sampling methods.

(Essay)

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Question 89

The purpose of stratification is to permit auditors to emphasize certain aspects of a population and deemphasize others.

(True/False)

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Question 90

An accounts receivable population contains a total of four customers. The accounts, the amounts, and the cumulative total are shown below. Monetary-unit sampling is to be used. Based on the information above, the population size is:

(Multiple Choice)

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Question 91

The nine steps in planning the sample are almost identical for nonstatistical sampling and difference estimation. However, there are three important differences. Discuss each of the three differences.

(Essay)

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Question 92

Stratified sampling is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with:

(Multiple Choice)

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Question 93

The acceptable risk of incorrect acceptance is most related to:

(Multiple Choice)

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Question 94

The client's trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:

(Multiple Choice)

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Question 95

The final step in the evaluation of the audit results is the decision to:

(Multiple Choice)

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Question 96

Tolerable misstatement is used to:

(Multiple Choice)

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Question 97

As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:

(Multiple Choice)

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Question 98

The confidence limits in variables sampling are similar to the monetary-unit sampling's:

(Multiple Choice)

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Question 99

The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is:

(Multiple Choice)

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Question 100

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Exam 17: Audit Sampling for Tests of Details and Balances

If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?

If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance:

The most important difference among tests of controls, substantive tests of transactions, and tests of details of balances lies in what the auditor wants to measure. Explain what each type of test attempts to measure.

The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:

The statistical results when Monetary-Unit Sampling (MUS) is used are called exception bounds.

Your audit sampling program states: the upper misstatement limit is $13,200 and the risk of incorrect acceptance is at the 95% confidence level. This means:

When selecting a stratified sample, the sample size is:

In monetary-unit sampling, the relationship between tolerable misstatement size and required sample size is:

Discuss the advantages and disadvantages of monetary-unit sampling over other sampling methods.

The purpose of stratification is to permit auditors to emphasize certain aspects of a population and deemphasize others.

An accounts receivable population contains a total of four customers. The accounts, the amounts, and the cumulative total are shown below. Monetary-unit sampling is to be used. Based on the information above, the population size is:

The nine steps in planning the sample are almost identical for nonstatistical sampling and difference estimation. However, there are three important differences. Discuss each of the three differences.

Stratified sampling is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with:

The acceptable risk of incorrect acceptance is most related to:

The client's trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:

The final step in the evaluation of the audit results is the decision to:

Tolerable misstatement is used to:

As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:

The confidence limits in variables sampling are similar to the monetary-unit sampling's:

The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is:

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

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