Question 1

Which of the following statements is in?

Accepted Answer

A)  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 
B)  an auditor may decide to stratify the population before selecting a sample from it 
C)  an auditor will use their professional judgement to determine the tolerable error and required level of confidence 
D)  an auditor will use their professional judgement when considering what would be considered an error within the population tested 
A)  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 
B)  an auditor may decide to stratify the population before selecting a sample from it 
C)  an auditor will use their professional judgement to determine the tolerable error and required level of confidence 
D)  an auditor will use their professional judgement when considering what would be considered an error within the population tested

Question 2

The risk that the auditor concludes that a material misstatement exists when it does not is likely to result in an increase in audit effort when it is not required.

Accepted Answer

A) True 
 B)False

Question 3

Non-statistical sampling involves random selection and probability theory to evaluate the results.

Accepted Answer

A) True 
 B)False

Question 4

An audit working paper generally includes:

Accepted Answer

A)  the client's name 
B)  cross-referencing between working papers 
C)  a file reference 
D)  all of the above 
A)  the client's name 
B)  cross-referencing between working papers 
C)  a file reference 
D)  all of the above

Question 5

The permanent file includes client information and documentation that apply to more than one audit.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

Tolerable error is the minimum error an auditor is willing to accept within the population tested.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

Before selecting a sample, an auditor will use their professional judgement to:

Accepted Answer

A)  set the required level of confidence 
B)  set the tolerable error rate 
C)  select an appropriate population for testing 
D)  all of the above 
A)  set the required level of confidence 
B)  set the tolerable error rate 
C)  select an appropriate population for testing 
D)  all of the above

Question 10

When testing controls, sampling risk is the risk that the auditor:

Accepted Answer

A)  concludes that their client's internal controls are ineffective when they are effective 
B)  concludes that their client's internal controls are effective when they are ineffective 
C)  both a and b 
D)  none of the above 
A)  concludes that their client's internal controls are ineffective when they are effective 
B)  concludes that their client's internal controls are effective when they are ineffective 
C)  both a and b 
D)  none of the above

Question 11

The permanent file includes detailed descriptions of evidence gathered for a particular year's audit.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

Non-sampling risk arises when an auditor:

Accepted Answer

A)  does not use sampling 
B)  uses an inappropriate audit procedure 
C)  tests all of the items in a population 
D)  spends too much time testing the accounts most at risk of material misstatement 
A)  does not use sampling 
B)  uses an inappropriate audit procedure 
C)  tests all of the items in a population 
D)  spends too much time testing the accounts most at risk of material misstatement

Question 14

When conducting an audit, statistical sampling involves

Accepted Answer

A)  random selection and probability to evaluate results 
B)  calculated selections and probability to evaluate results 
C)  less staff and training, and is less costly than other sampling 
D)  allows the auditor to select a sample they believe appropriate 
A)  random selection and probability to evaluate results 
B)  calculated selections and probability to evaluate results 
C)  less staff and training, and is less costly than other sampling 
D)  allows the auditor to select a sample they believe appropriate

Question 15

Which of the following is not an advantage of non-statistical sampling?

Accepted Answer

A)  it allows an auditor to select a sample that they believe is appropriate 
B)  it allows an auditor to measure sampling risk 
C)  it is lower cost than statistical sampling 
D)  it requires less staff training 
A)  it allows an auditor to select a sample that they believe is appropriate 
B)  it allows an auditor to measure sampling risk 
C)  it is lower cost than statistical sampling 
D)  it requires less staff training

Question 16

Which of the following would not be included in an auditor's permanent file?

Accepted Answer

A)  The client's organisational chart 
B)  Copies of long-term contracts 
C)  Copies of debtors' confirmation letters 
D)  Prior years' audit reports 
A)  The client's organisational chart 
B)  Copies of long-term contracts 
C)  Copies of debtors' confirmation letters 
D)  Prior years' audit reports

Question 17

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

Accepted Answer

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

Question 18

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

Question 19

What impact will there be on sample size for substantive testing when there is an increase in the tolerable misstatement?

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

Why do auditors inspect records and documents?

Accepted Answer

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

Which of the following statements is in?

The risk that the auditor concludes that a material misstatement exists when it does not is likely to result in an increase in audit effort when it is not required.

Non-statistical sampling involves random selection and probability theory to evaluate the results.

An audit working paper generally includes:

The permanent file includes client information and documentation that apply to more than one audit.

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

Tolerable error is the minimum error an auditor is willing to accept within the population tested.

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

Before selecting a sample, an auditor will use their professional judgement to:

When testing controls, sampling risk is the risk that the auditor:

The permanent file includes detailed descriptions of evidence gathered for a particular year's audit.

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

Non-sampling risk arises when an auditor:

When conducting an audit, statistical sampling involves

Which of the following is not an advantage of non-statistical sampling?

Which of the following would not be included in an auditor's permanent file?

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

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:

What impact will there be on sample size for substantive testing when there is an increase in the tolerable misstatement?

Why do auditors inspect records and documents?

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Risk Assessment 1

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

Which of the following statements is in?

The risk that the auditor concludes that a material misstatement exists when it does not is likely to result in an increase in audit effort when it is not required.

Non-statistical sampling involves random selection and probability theory to evaluate the results.

An audit working paper generally includes:

The permanent file includes client information and documentation that apply to more than one audit.

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

Tolerable error is the minimum error an auditor is willing to accept within the population tested.

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

Before selecting a sample, an auditor will use their professional judgement to:

When testing controls, sampling risk is the risk that the auditor:

The permanent file includes detailed descriptions of evidence gathered for a particular year's audit.

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

Non-sampling risk arises when an auditor:

When conducting an audit, statistical sampling involves

Which of the following is not an advantage of non-statistical sampling?

Which of the following would not be included in an auditor's permanent file?

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

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:

What impact will there be on sample size for substantive testing when there is an increase in the tolerable misstatement?

Why do auditors inspect records and documents?

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Risk Assessment 1

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