Question 1

Non-probabilistic selection methods are not based on mathematical probabilities; therefore:

Accepted Answer

A)  the extent to which a sample is representative of the population may be difficult to determine. 
B)  they are discouraged by the AICPA. 
C)  they are not allowed by the Statements on Auditing Standards. 
D)  they are not as effective as statistical sampling. 
A)  the extent to which a sample is representative of the population may be difficult to determine. 
B)  they are discouraged by the AICPA. 
C)  they are not allowed by the Statements on Auditing Standards. 
D)  they are not as effective as statistical sampling. A

Question 2

The auditor may use which of the following criteria when using the directed sample selection technique?

Accepted Answer

A)  Items most likely to contain misstatements. 
B)  Items containing selected population characteristics. 
C)  Large dollar coverage. 
D)  Any of the above. 
A)  Items most likely to contain misstatements. 
B)  Items containing selected population characteristics. 
C)  Large dollar coverage. 
D)  Any of the above. D

Question 3

Which of the following statements best expresses the impact that the performance of audit procedures has on statistical vs. nonstatistical sampling?

Accepted Answer

A)  Audit procedures on the sample item will vary as a result of using either statistical or nonstatistical sampling. 
B)  The audit procedures will be the same for either statistical or nonstatistical sampling but they must be performed differently for each. 
C)  Statistical sampling requires quantitative audit procedures, whereas nonstatistical sampling requires judgmental audit procedures. 
D)  Audit procedures on the sample item will not vary as a result of using either statistical or nonstatistical sampling. 
A)  Audit procedures on the sample item will vary as a result of using either statistical or nonstatistical sampling. 
B)  The audit procedures will be the same for either statistical or nonstatistical sampling but they must be performed differently for each. 
C)  Statistical sampling requires quantitative audit procedures, whereas nonstatistical sampling requires judgmental audit procedures. 
D)  Audit procedures on the sample item will not vary as a result of using either statistical or nonstatistical sampling. D

Question 4

If the size of the sample to be used in a test of attributes is not determined by using statistical concepts, but the sample is chosen in accordance with random selection procedures:

Accepted Answer

A)  no inferences can be drawn from the sample. 
B)  the auditor has committed a nonsampling error. 
C)  the auditor may or may not achieve the tolerable exception rate at the acceptable risk of assessing control risk too low. 
D)  the auditor will have to evaluate results using the principles of discovery sampling. 
A)  no inferences can be drawn from the sample. 
B)  the auditor has committed a nonsampling error. 
C)  the auditor may or may not achieve the tolerable exception rate at the acceptable risk of assessing control risk too low. 
D)  the auditor will have to evaluate results using the principles of discovery sampling.

Question 5

The exception rate that the auditor will permit in the population and still be willing to use the preliminary control risk assessment is called the:

Accepted Answer

A)  acceptable exception rate. 
B)  estimated population exception rate. 
C)  sample exception rate. 
D)  tolerable exception rate. 
A)  acceptable exception rate. 
B)  estimated population exception rate. 
C)  sample exception rate. 
D)  tolerable exception rate.

Question 6

Describe the differences between statistical and nonstatistical sampling in terms of (1) the sample selection methods used, and (2) quantification of sampling risk.

Accepted Answer

Nonstatistical sampling differs from sta

Question 7

Describe each of the four types of sample selection methods commonly associated with statistical audit sampling.

Accepted Answer

Four types of sample selection methods c

Question 8

What types of exceptions are auditors most concerned with when evaluating populations of accounting data?

Accepted Answer

There are three types of exceptions that

Question 9

Sampling risk may be controlled by:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 10

Which of the following is most correct when using audit sampling for exception rates?

Accepted Answer

A)  auditor is concerned with the lowest rate 
B)  auditor is concerned with the highest rate 
C)  auditor is concerned with the average on previous audits 
D)  doesn't impact the auditors decision 
A)  auditor is concerned with the lowest rate 
B)  auditor is concerned with the highest rate 
C)  auditor is concerned with the average on previous audits 
D)  doesn't impact the auditors decision

Question 11

In nonstatistical sampling, the calculated sampling error is the difference between the tolerable exception rate and the sample exception rate.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?

Accepted Answer

A)  Sampling risk 
B)  Nonsampling risk 
C)  Audit risk 
D)  Detection risk 
A)  Sampling risk 
B)  Nonsampling risk 
C)  Audit risk 
D)  Detection risk

Question 13

One way to control sampling risk is to increase sample size.

Accepted Answer

A) True 
 B)False

Question 14

When audit procedures have been completed for an attributes sampling application, the auditor must generalize from the sample to the population. Which of the following statements would be incorrect regarding this process?

Accepted Answer

A)  The auditor would use an attributes sampling table to determine the computed upper exception rate. 
B)  The computed upper exception rate is the highest exception rate in the population that the auditor is willing to accept. 
C)  It would be wrong for the auditor to conclude that the population exception rate is exactly the same as the sample exception rate. 
D)  In selecting the table corresponding to the risk of overreliance, it should be the same as the ARACR used for determining the initial sample size. 
A)  The auditor would use an attributes sampling table to determine the computed upper exception rate. 
B)  The computed upper exception rate is the highest exception rate in the population that the auditor is willing to accept. 
C)  It would be wrong for the auditor to conclude that the population exception rate is exactly the same as the sample exception rate. 
D)  In selecting the table corresponding to the risk of overreliance, it should be the same as the ARACR used for determining the initial sample size.

Question 15

Whenever auditors use sampling, they risk making incorrect conclusions about the population. For audit sampling of tests of transactions this risk is known as:

Accepted Answer

A)  acceptable risk of assessing control risk too low. 
B)  acceptable risk of assessing transaction testing as too low. 
C)  risk that the sample is not representative of the population. 
D)  risk that the sample conclusions cannot be useful because of non-probability sampling. 
A)  acceptable risk of assessing control risk too low. 
B)  acceptable risk of assessing transaction testing as too low. 
C)  risk that the sample is not representative of the population. 
D)  risk that the sample conclusions cannot be useful because of non-probability sampling.

Question 16

Sampling risk results from the auditor's failure to recognize exceptions in transaction data.

Accepted Answer

A) True 
 B)False

Question 17

ARACR is normally lower for a public company audit than a private company audit.

Accepted Answer

A) True 
 B)False

Question 18

The prior year's sample exception rate is the auditor's best estimate of the exception rate in the population for the current year.

Accepted Answer

A) True 
 B)False

Question 19

An auditor plans to examine a sample of 40 canceled checks for a countersignature which is prescribed in the client's control procedures manual. Two of the checks in sample cannot be located by the company or the auditor. The auditor would most likely:

Accepted Answer

A)  treat the missing checks as a deviation when evaluating the results of the sample. 
B)  draw a conclusion on a sample size of 38. 
C)  substitute two more checks to get to a sample size of 40. 
D)  recalculate the sample excluding the original 40 checks. 
A)  treat the missing checks as a deviation when evaluating the results of the sample. 
B)  draw a conclusion on a sample size of 38. 
C)  substitute two more checks to get to a sample size of 40. 
D)  recalculate the sample excluding the original 40 checks.

Question 20

As the auditor you are assessing the proper sample size to use in testing controls. When using attributes sampling which of the following is most correct?

Accepted Answer

A)  A 10% change in population size will have the least effect on sample size. 
B)  A 10% change in the tolerable deviation rate will have the least effect on sample size. 
C)  A 10% change in the expected deviation rate will have the least effect on sample size. 
D)  A 10% change in the tolerable will have the least effect on sample size 
A)  A 10% change in population size will have the least effect on sample size. 
B)  A 10% change in the tolerable deviation rate will have the least effect on sample size. 
C)  A 10% change in the expected deviation rate will have the least effect on sample size. 
D)  A 10% change in the tolerable will have the least effect on sample size

Exam 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Non-probabilistic selection methods are not based on mathematical probabilities; therefore:

The auditor may use which of the following criteria when using the directed sample selection technique?

Which of the following statements best expresses the impact that the performance of audit procedures has on statistical vs. nonstatistical sampling?

If the size of the sample to be used in a test of attributes is not determined by using statistical concepts, but the sample is chosen in accordance with random selection procedures:

The exception rate that the auditor will permit in the population and still be willing to use the preliminary control risk assessment is called the:

Describe the differences between statistical and nonstatistical sampling in terms of (1) the sample selection methods used, and (2) quantification of sampling risk.

Describe each of the four types of sample selection methods commonly associated with statistical audit sampling.

What types of exceptions are auditors most concerned with when evaluating populations of accounting data?

Sampling risk may be controlled by:

Which of the following is most correct when using audit sampling for exception rates?

In nonstatistical sampling, the calculated sampling error is the difference between the tolerable exception rate and the sample exception rate.

Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?

One way to control sampling risk is to increase sample size.

When audit procedures have been completed for an attributes sampling application, the auditor must generalize from the sample to the population. Which of the following statements would be incorrect regarding this process?

Whenever auditors use sampling, they risk making incorrect conclusions about the population. For audit sampling of tests of transactions this risk is known as:

Sampling risk results from the auditor's failure to recognize exceptions in transaction data.

ARACR is normally lower for a public company audit than a private company audit.

The prior year's sample exception rate is the auditor's best estimate of the exception rate in the population for the current year.

An auditor plans to examine a sample of 40 canceled checks for a countersignature which is prescribed in the client's control procedures manual. Two of the checks in sample cannot be located by the company or the auditor. The auditor would most likely:

As the auditor you are assessing the proper sample size to use in testing controls. When using attributes sampling which of the following is most correct?

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

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

Audit Sampling for Tests of Details and Balances

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