Question 1

An account balance is $300,000 and there are 25 items in the account, six of which have balances that equal or exceed $15,000.To ensure that all accounts with balances of at least $15,000 are selected, what would the sampling interval be?

Accepted Answer

The answer of An account balance is $300,000 and there...

Question 2

The planned allowance for sampling risk is also related to _______.

Accepted Answer

A) the desired level of assurance from the sample 
B) the desired level of assurance from the population 
C) a decrease in inherent risk 
D) an increase in audit risk

Question 3

Professional judgment is needed in applying both statistical and non-statistical sampling.

Accepted Answer

A) True 
 B)False

Question 4

The process of selecting a sample _______.

Accepted Answer

A) should be biased, and the auditor should attempt to obtain a representative sample of the items in the balance or transaction class being sampled 
B) should be unbiased, and the auditor should attempt to obtain a representative sample of the items in the balance or transaction class being sampled 
C) should be unbiased, and the auditor should attempt to obtain a certain sample of the items in the balance or transaction class being sampled 
D) should be determined in conjunction with the client's internal auditors

Question 5

In non-statistical sampling, _______.

Accepted Answer

A) the auditor determines sample size 
B) the auditor determines sample selection methods 
C) the auditor evaluates the sample results on the basis of the professional judgment and the auditor's own experience. 
D) All of these choices are correct

Question 6

When auditing a construction company, the auditor might use audit data analytics (ADA) to determine, _______.

Accepted Answer

A) the likelihood of receiving audit fees upon conclusion of the audit 
B) the gross margin on each construction contract 
C) the inherent riskiness of the client's industry 
D) if appropriate receivables balance confirmations have been returned

Question 7

The level of assurance that the sample is representative of the population is referred to as _______.

Accepted Answer

A) the desired level of assurance that tolerable misstatement is not exceeded by the actual misstatement in the population 
B) tolerable misstatement 
C) the amount of expected misstatement in the population 
D) the amount of misstatement in the population

Question 8

An allowance for sampling risk is _______.

Accepted Answer

A) an evaluation of the certainty associated with not sampling the entire population 
B) an evaluation of the uncertainty associated with not sampling the entire sample 
C) an evaluation of the uncertainty associated with not sampling the entire population 
D) an evaluation of the certainty associated with not sampling the entire sample

Question 9

Which of the following steps are involved in planning and executing a non-statistical sample?

Accepted Answer

A) Judgmentally select a representative sample 
B) Apply audit procedures 
C) Randomly select a representative sample 
D) Determine sample size statistically

Question 10

In the given table, match the entities related to audit data analysis and sampling on the left with their explanations on the right.

Accepted Answer

The answer of In the given table, match the entities...

Question 11

When a customer fails to reply to a confirmation and the auditor is unable to obtain other evidence about the existence of the receivable, _______.

Accepted Answer

A) the auditor must conclude that these balances are 100% misstatements and project the misstatements on the remaining portion of the population 
B) the auditor must conclude that these balances are 50% misstatements and project the misstatements on the remaining portion of the population 
C) the auditor must conclude that these balances are 100% misstatements and project the misstatements on the remaining portion of the sample 
D) the auditor should notify management of the auditor's intention to withdraw from the engagement

Question 12

The use of audit sampling _______.

Accepted Answer

A) is prohibited by the AICPA 
B) is mandatory for all publicly-traded companies 
C) may be a function of the efficiency and effectiveness of the audit procedure 
D) may be a function of the efficiency and effectiveness of the internal auditors

Question 13

Non-sampling risk is typically controlled by a firm's quality control procedures and the review of audit work performed by a manager or partner on the audit team or an engagement quality control reviewer.

Accepted Answer

A) True 
 B)False

Question 14

A/An _______ is a population that is overstated if the population of interest is understated.

Accepted Answer

A) reciprocal population 
B) adverse population 
C) recurrent population 
D) overstated population

Question 15

The more procedures that are directed to the same audit assertion, _______.

Accepted Answer

A) the less procedures should be directed to other audit assertions 
B) the less an auditor will need to rely on the evidence provided by one test alone and the smaller the sample size required 
C) the more an auditor will need to rely on the evidence provided by one test alone and the smaller the sample size required 
D) the less an auditor will need to rely on the evidence provided by one test alone and the greater the sample size required

Question 16

In the given table, match the concepts on the left of the table with their details on the right.

Accepted Answer

The answer of In the given table, match the concepts...

Question 17

The sampling unit in PPS (probability proportionate to size) sampling _______.

Accepted Answer

A) is the account itself 
B) is determined by the class of account 
C) is an aggregated dollar amount 
D) is the individual dollar amount

Question 18

Probability Proportionate to Size (PPS) sampling is an approach that uses firm structure theory to express a conclusion in dollar amounts.

Accepted Answer

A) True 
 B)False

Question 19

In non-statistical sampling, _______.

Accepted Answer

A) the auditor determines samples size, sample selection methods, and evaluates the sample results on the basis of the professional judgment and the auditor's own experience. 
B) the auditor determines samples size, sample selection methods, and evaluates the sample results entirely on the basis of predetermined statistical parameters. 
C) the auditor uses the internal audit function to gather samples 
D) the auditor selects a sample of certain balance sheet accounts and exclusively audits them

Question 20

With respect to sample size, _______ risk of incorrect acceptance is equivalent to having a higher desired level of assurance from the sample.

Accepted Answer

The answer of With respect to sample size, _______ risk...

Exam 10: Risk Responseaudit Sampling for Substantive Testing

An account balance is $300,000 and there are 25 items in the account, six of which have balances that equal or exceed $15,000.To ensure that all accounts with balances of at least $15,000 are selected, what would the sampling interval be?

The planned allowance for sampling risk is also related to _______.

Professional judgment is needed in applying both statistical and non-statistical sampling.

The process of selecting a sample _______.

In non-statistical sampling, _______.

When auditing a construction company, the auditor might use audit data analytics (ADA) to determine, _______.

The level of assurance that the sample is representative of the population is referred to as _______.

An allowance for sampling risk is _______.

Which of the following steps are involved in planning and executing a non-statistical sample?

In the given table, match the entities related to audit data analysis and sampling on the left with their explanations on the right.

When a customer fails to reply to a confirmation and the auditor is unable to obtain other evidence about the existence of the receivable, _______.

The use of audit sampling _______.

Non-sampling risk is typically controlled by a firm's quality control procedures and the review of audit work performed by a manager or partner on the audit team or an engagement quality control reviewer.

A/An _______ is a population that is overstated if the population of interest is understated.

The more procedures that are directed to the same audit assertion, _______.

In the given table, match the concepts on the left of the table with their details on the right.

The sampling unit in PPS (probability proportionate to size) sampling _______.

Probability Proportionate to Size (PPS) sampling is an approach that uses firm structure theory to express a conclusion in dollar amounts.

In non-statistical sampling, _______.

With respect to sample size, _______ risk of incorrect acceptance is equivalent to having a higher desired level of assurance from the sample.