Question 1

For high-risk accounts, the timing of most audit procedures will be:

Accepted Answer

A)  whenever the client says it is most convenient for them to be conducted 
B)  at, or after, year-end 
C)  before year end 
D)  during the interim audit testing stage 
A)  whenever the client says it is most convenient for them to be conducted 
B)  at, or after, year-end 
C)  before year end 
D)  during the interim audit testing stage

Question 2

Non statistical sampling is easier to use than statistical sampling as it

Accepted Answer

A)  requires less staff training 
B)  is lower in cost 
C)  allows the auditor to select a sample they believe is appropriate 
D)  all of the above 
A)  requires less staff training 
B)  is lower in cost 
C)  allows the auditor to select a sample they believe is appropriate 
D)  all of the above

Question 3

When conducting detailed substantive procedures, auditors search for evidence that:

Accepted Answer

A)  the client's internal control system is operating effectively 
B)  all transactions have been recorded in the accounts 
C)  no fraud has occurred during the year 
D)  they have remained independent of their clients 
A)  the client's internal control system is operating effectively 
B)  all transactions have been recorded in the accounts 
C)  no fraud has occurred during the year 
D)  they have remained independent of their clients

Question 4

A range of sampling techniques are available to auditors. Evaluate the advantages and disadvantages of the major techniques.

Accepted Answer

Sampling techniques are an essential too

Question 5

Projected error refers to the extrapolation of the errors detected when testing a sample to the population from which the sample was drawn.

Accepted Answer

A) True 
 B)False

Question 6

Identify and explain the factors that influence the sample size for tests of controls.

Accepted Answer

There are a number of factors that will

Question 7

An audit plan includes the audit procedures to be used when testing controls and when conducting detailed substantive audit procedures.

Accepted Answer

A) True 
 B)False

Question 8

If the total projected error in an account balance was $3 248 and the tolerable error was set at $10 000, the auditor would:

Accepted Answer

A)  conclude that the errors uncovered are material 
B)  decide that further audit work was required 
C)  conclude that the errors detected are not material 
D)  conduct other tests aimed at the assertion being tested 
A)  conclude that the errors uncovered are material 
B)  decide that further audit work was required 
C)  conclude that the errors detected are not material 
D)  conduct other tests aimed at the assertion being tested

Question 9

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing.

Accepted Answer

A) True 
 B)False

Question 10

When testing controls, the tolerable error is:

Accepted Answer

A)  the tolerable rate of deviation that an auditor will accept before concluding that a control is effective 
B)  the minimum rate of deviation that an auditor will accept 
C)  the tolerable rate of deviation that an auditor will accept before concluding that a control is ineffective 
D)  the maximum amount of error in an account balance that an auditor will accept before concluding that an account is materially misstated 
A)  the tolerable rate of deviation that an auditor will accept before concluding that a control is effective 
B)  the minimum rate of deviation that an auditor will accept 
C)  the tolerable rate of deviation that an auditor will accept before concluding that a control is ineffective 
D)  the maximum amount of error in an account balance that an auditor will accept before concluding that an account is materially misstated

Question 11

Control risk is the risk that:

Accepted Answer

A)  an auditor expresses an inappropriate audit opinion when a financial report is materially misstated 
B)  an auditor's substantive procedures will not detect material misstatements 
C)  a client's system of internal controls will not prevent or detect a material misstatement 
D)  none of the above 
A)  an auditor expresses an inappropriate audit opinion when a financial report is materially misstated 
B)  an auditor's substantive procedures will not detect material misstatements 
C)  a client's system of internal controls will not prevent or detect a material misstatement 
D)  none of the above

Question 12

An increase in the number of sampling units in the population will result in a decrease in the sample size.

Accepted Answer

A) True 
 B)False

Question 13

An advantage of statistical sampling is that it allows an auditor to measure sampling risk.

Accepted Answer

A) True 
 B)False

Question 14

Substantive audit procedures include:

Accepted Answer

A)  detailed tests of balances 
B)  analytical procedures 
C)  detailed tests of transactions 
D)  all of the above 
A)  detailed tests of balances 
B)  analytical procedures 
C)  detailed tests of transactions 
D)  all of the above

Question 15

Which of the following statements regarding statistical sampling is ?

Accepted Answer

A)  it is easier to use than non-statistical sampling 
B)  it involves haphazard selection 
C)  it is generally used for low risk accounts 
D)  it involves random selection 
A)  it is easier to use than non-statistical sampling 
B)  it involves haphazard selection 
C)  it is generally used for low risk accounts 
D)  it involves random selection

Question 16

Random selection involves:

Accepted Answer

A)  dividing a population into groups of sampling units with similar characteristics 
B)  the selection of a sample without the use of a methodical technique 
C)  the selection of a sample that is free from bias and where each item in a population has an equal chance of selection 
D)  the selection of items that an auditor believes should be included in their sample for testing 
A)  dividing a population into groups of sampling units with similar characteristics 
B)  the selection of a sample without the use of a methodical technique 
C)  the selection of a sample that is free from bias and where each item in a population has an equal chance of selection 
D)  the selection of items that an auditor believes should be included in their sample for testing

Question 17

When evaluating sample test results, which of the following statements is in?

Accepted Answer

A)  if an auditor discovers errors when testing transactions or account balances, they will need to project the error to the population being tested 
B)  an auditor will not consider whether the population was stratified before being sampled 
C)  if an error is considered to be unique it will be removed before projecting remaining errors to the population 
D)  if the rate of deviation exceeds the tolerable rate the auditor will extend their testing 
A)  if an auditor discovers errors when testing transactions or account balances, they will need to project the error to the population being tested 
B)  an auditor will not consider whether the population was stratified before being sampled 
C)  if an error is considered to be unique it will be removed before projecting remaining errors to the population 
D)  if the rate of deviation exceeds the tolerable rate the auditor will extend their testing

Question 18

Sampling is not required when:

Accepted Answer

A)  it is the first year that the auditor has done the audit for a client 
B)  the auditor is conducting tests of controls 
C)  an audit procedure is conducted on an entire group of transactions 
D)  the client requests the auditor not to collect samples of certain transactions 
A)  it is the first year that the auditor has done the audit for a client 
B)  the auditor is conducting tests of controls 
C)  an audit procedure is conducted on an entire group of transactions 
D)  the client requests the auditor not to collect samples of certain transactions

Question 19

When control risk is high the audit strategy is to:

Accepted Answer

A)  do little or no tests of controls and increase reliance on substantive testing of transactions and account balances 
B)  assume the client's management is dishonest and immediately report them to ASIC 
C)  increase reliance on tests of controls and reduce reliance on substantive testing of transactions and account balances. 
D)  refuse to continue with the remainder of the audit due to the high risk of fraud 
A)  do little or no tests of controls and increase reliance on substantive testing of transactions and account balances 
B)  assume the client's management is dishonest and immediately report them to ASIC 
C)  increase reliance on tests of controls and reduce reliance on substantive testing of transactions and account balances. 
D)  refuse to continue with the remainder of the audit due to the high risk of fraud

For high-risk accounts, the timing of most audit procedures will be:

Non statistical sampling is easier to use than statistical sampling as it

When conducting detailed substantive procedures, auditors search for evidence that:

A range of sampling techniques are available to auditors. Evaluate the advantages and disadvantages of the major techniques.

Projected error refers to the extrapolation of the errors detected when testing a sample to the population from which the sample was drawn.

Identify and explain the factors that influence the sample size for tests of controls.

An audit plan includes the audit procedures to be used when testing controls and when conducting detailed substantive audit procedures.

If the total projected error in an account balance was $3 248 and the tolerable error was set at $10 000, the auditor would:

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing.

When testing controls, the tolerable error is:

Control risk is the risk that:

An increase in the number of sampling units in the population will result in a decrease in the sample size.

An advantage of statistical sampling is that it allows an auditor to measure sampling risk.

Substantive audit procedures include:

Which of the following statements regarding statistical sampling is ?

Random selection involves:

When evaluating sample test results, which of the following statements is in?

Sampling is not required when:

When control risk is high the audit strategy is to:

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

For high-risk accounts, the timing of most audit procedures will be:

Non statistical sampling is easier to use than statistical sampling as it

When conducting detailed substantive procedures, auditors search for evidence that:

A range of sampling techniques are available to auditors. Evaluate the advantages and disadvantages of the major techniques.

Projected error refers to the extrapolation of the errors detected when testing a sample to the population from which the sample was drawn.

Identify and explain the factors that influence the sample size for tests of controls.

An audit plan includes the audit procedures to be used when testing controls and when conducting detailed substantive audit procedures.

If the total projected error in an account balance was $3 248 and the tolerable error was set at $10 000, the auditor would:

Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing.

When testing controls, the tolerable error is:

Control risk is the risk that:

An increase in the number of sampling units in the population will result in a decrease in the sample size.

An advantage of statistical sampling is that it allows an auditor to measure sampling risk.

Substantive audit procedures include:

Which of the following statements regarding statistical sampling is ?

Random selection involves:

When evaluating sample test results, which of the following statements is in?

Sampling is not required when:

When control risk is high the audit strategy is to:

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