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

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Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

(True/False)

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Question 81

In practice, auditors do not know whether a sample is representative, even after all testing is complete.

(True/False)

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Question 82

The acceptable risk of assessing control risk too low is:

(Multiple Choice)

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Question 83

You are determining the significance of the following: you set a 5% risk of assessing control risk to low and your computation of the upper deviation risk is 7%. What could you conclude?

(Multiple Choice)

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Question 84

There are 14 steps to attributes sampling, divided into three sections: plan the sample, select the sample and perform the audit procedures, and evaluate the results. Discuss the three steps that comprise the "evaluate the results" section.

(Essay)

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Question 85

When selecting a sample, random numbers may be obtained either with replacement or without replacement. Although both selection methods are theoretically sound, auditors rarely use replacement sampling.

(True/False)

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Question 86

You are designing the audit plan for Mathews & Company. You are a strong proponent for statistical sampling over nonstatistical sampling. Make your case.

(Essay)

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Question 87

The only way to know with certainty whether a sample is representative is to subsequently audit the entire population.

(True/False)

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Question 88

Discuss what is meant by "nonsampling risk."

(Essay)

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Question 89

The difference between the tolerable exception rate and the estimated population exception rate is called:

(Multiple Choice)

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Question 90

Before the population can be considered acceptable based on the acceptable risk of assessing control risk too low, the computed upper exception rate must be:

(Multiple Choice)

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Question 91

An auditor uses statistical sampling for attributes in internal control testing. She would most likely reduce the planned reliable on the control tested when:

(Multiple Choice)

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Question 92

The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is:

(Multiple Choice)

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Question 93

When the computed upper exception rate is greater than the tolerable exception rate, it is necessary for the auditor to take specific action. Which of the following courses of action would be most difficult to justify?

(Multiple Choice)

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Question 94

Place the following steps in their proper order: 1) Analyze exceptions 2) Select the sample 3) Define attributes and exception conditions 4) State the objectives of the audit test 5) Specify the tolerable exception rate

(Multiple Choice)

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Question 95

When using nonstatistical sampling, the sample must be a probabilistic one.

(True/False)

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Question 96

The relationship of acceptable risk of accessing control risk too low (ARACR) to sample size is:

(Multiple Choice)

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Question 97

Which of the following statements is not correct?

(Multiple Choice)

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Question 98

Which of the following is not true for nonstatistical sampling?

(Multiple Choice)

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Question 99

A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:

(Multiple Choice)

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Question 100

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

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

In practice, auditors do not know whether a sample is representative, even after all testing is complete.

The acceptable risk of assessing control risk too low is:

You are determining the significance of the following: you set a 5% risk of assessing control risk to low and your computation of the upper deviation risk is 7%. What could you conclude?

There are 14 steps to attributes sampling, divided into three sections: plan the sample, select the sample and perform the audit procedures, and evaluate the results. Discuss the three steps that comprise the "evaluate the results" section.

When selecting a sample, random numbers may be obtained either with replacement or without replacement. Although both selection methods are theoretically sound, auditors rarely use replacement sampling.

You are designing the audit plan for Mathews & Company. You are a strong proponent for statistical sampling over nonstatistical sampling. Make your case.

The only way to know with certainty whether a sample is representative is to subsequently audit the entire population.

Discuss what is meant by "nonsampling risk."

The difference between the tolerable exception rate and the estimated population exception rate is called:

Before the population can be considered acceptable based on the acceptable risk of assessing control risk too low, the computed upper exception rate must be:

An auditor uses statistical sampling for attributes in internal control testing. She would most likely reduce the planned reliable on the control tested when:

The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is:

When the computed upper exception rate is greater than the tolerable exception rate, it is necessary for the auditor to take specific action. Which of the following courses of action would be most difficult to justify?

Place the following steps in their proper order: 1) Analyze exceptions 2) Select the sample 3) Define attributes and exception conditions 4) State the objectives of the audit test 5) Specify the tolerable exception rate

When using nonstatistical sampling, the sample must be a probabilistic one.

The relationship of acceptable risk of accessing control risk too low (ARACR) to sample size is:

Which of the following statements is not correct?

Which of the following is not true for nonstatistical sampling?

A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:

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

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