Question 1

The PPS (probability proportional to size) sampling technique is such that _______.

Accepted Answer

A) the probability that a particular sampling unit will be chosen in the sample is inversely proportionate to the monetary size of the item 
B) the probability that a particular sampling unit will be chosen in the sample is proportionate to the monetary size of the item 
C) clients with larger balances are less likely to be sampled and audited 
D) only large firms can afford the extra cost associated with this procedure

Question 2

Probability Proportionate to Size (PPS) sampling is _______.

Accepted Answer

A) an approach that uses attribute sampling theory to express a conclusion in dollar amounts 
B) an approach that uses non-statistical sampling theory to express a conclusion in dollar amounts 
C) rarely used in auditing, due to its prohibitive cost 
D) required to be used in the auditing of publicly traded companies

Question 3

When an audit procedure is tested on an entire group of transactions, _______ is not required.

Accepted Answer

The answer of When an audit procedure is tested on...

Question 4

Stratification is often advantageous because _______.

Accepted Answer

A) the combined sample size often will be significantly less than a single sample size based on a non-stratified population 
B) the combined sample size often will be significantly more than a single sample size based on a non-stratified population 
C) it is a cheaper approach and will usually result in lower audit fees for the client 
D) it is usually more expensive and will result in higher audit fees for the client

Question 5

If analytical procedures provide evidence that interest expense is presented fairly, _______.

Accepted Answer

A) the auditor can appropriately limit the assurance needed from tests of details of transactions and related sample sizes when testing interest expense 
B) the auditor can appropriately increase the assurance needed from tests of details of transactions and related sample sizes when testing interest expense 
C) then there is no need for the auditor to audit any related accounts, such as notes payable 
D) then the auditor should direct management to pay the associated expense

Question 6

Which of the following are the characteristics of non-statistical sampling?

Accepted Answer

A) It allows selecting the sample without using a formal statistical technique. 
B) It allows determining samples size entirely on the basis of the professional judgment. 
C) It helps measure sampling risk. 
D) It helps evaluate the sample results mathematically.

Question 7

Three techniques that are typically used in classical variables sampling are _______.

Accepted Answer

A) mean-per-unit 
B) difference 
C) ratio 
D) All of these answer choices are correct.

Question 8

When using PPS (probability proportionate to size) sampling, _______.

Accepted Answer

A) the population consists of the class of transactions or the account balance to be tested 
B) the population consists a particular transaction or the account balance to be tested 
C) the population consists of the class of transactions or multiple account balances to be tested 
D) management should be allowed some latitude in selecting which accounts to be sampled

Question 9

The ultimate purpose of a test of controls is to obtain reasonable assurance that an assertion is presented fairly in all material respects.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following are situations where the auditor is likely to use audit sampling?

Accepted Answer

A) Relevant data is not reliable and internal controls over the reliability of data are weak. 
B) Relevant data may be in different formats and is not easy to use. 
C) Relevant data is reliable and internal controls over the reliability of data are strong. 
D) Relevant data is clean or can be cleaned up easily.

Question 11

When conducting substantive tests, sampling risk is the risk that an auditor concludes that a material misstatement does not exist when it actually does, or an auditor concludes that a material misstatement exists when it actually does not.

Accepted Answer

A) True 
 B)False

Question 12

AS 2315 and AU-C 530 on Audit Sampling_______.

Accepted Answer

A) provide guidance on audit sampling 
B) provide guidance on client acceptance 
C) relate only to private companies 
D) relate only to companies with subsidiaries

Question 13

Which method would the auditor most likely use when the relevant data is clean or can be cleaned up easily?

Accepted Answer

A) Audit data analytics 
B) Audit sampling 
C) Statistical sampling 
D) Substantive testing

Question 14

Tolerable misstatement when performing a substantive test _______.

Accepted Answer

A) is the maximum dollar amount of misstatement that an auditor is willing to accept within the population tested and conclude that the population is presented fairly 
B) is the minimum dollar amount of misstatement that an auditor is willing to accept within the population tested, and conclude that the population is presented fairly 
C) does not apply if the auditor plans to issue an unmodified opinion 
D) does not apply if the auditor plans to issue a modified opinion

Question 15

Which of the following is a characteristic of non-statistical sampling?

Accepted Answer

A) It allows selecting an appropriate sample. 
B) It helps determine sample size objectively. 
C) It allows selecting sample size quantitatively. 
D) It allows a random selection of sample items.

Question 16

The auditor is most likely to use _______ when the data available is relevant to an audit assertion of interest.

Accepted Answer

A) Audit data analytics 
B) Audit sampling 
C) Statistical sampling 
D) Substantive testing

Question 17

The choice of using audit sampling vs.audit data analytics (ADA) is often a matter of what is most effective and efficient in determining whether an assertion is presented fairly, in all material respects.

Accepted Answer

A) True 
 B)False

Question 18

The auditor is more likely to use audit sampling when internal controls are strong and reliable data does not exist to support audit data analytics (ADA).

Accepted Answer

A) True 
 B)False

Question 19

In which of the following situations is the auditor most likely to use audit data analytics?

Accepted Answer

A) The available data is reliable and comes from a strong system of internal controls. 
B) Internal controls are weak. 
C) Certain audit procedures are required by professional standards. 
D) The auditor needs to have data that is relevant to the audit test.

Question 20

The auditor can _______.

Accepted Answer

A) never be certain that a representative sample has been achieved 
B) always be certain that a representative sample has been achieved 
C) request management check the sample for evidence of bias 
D) request the internal auditor check the sample for evidence of bias

Exam 10: Risk Responseaudit Sampling for Substantive Testing

The PPS (probability proportional to size) sampling technique is such that _______.

Probability Proportionate to Size (PPS) sampling is _______.

When an audit procedure is tested on an entire group of transactions, _______ is not required.

Stratification is often advantageous because _______.

If analytical procedures provide evidence that interest expense is presented fairly, _______.

Which of the following are the characteristics of non-statistical sampling?

Three techniques that are typically used in classical variables sampling are _______.

When using PPS (probability proportionate to size) sampling, _______.

The ultimate purpose of a test of controls is to obtain reasonable assurance that an assertion is presented fairly in all material respects.

Which of the following are situations where the auditor is likely to use audit sampling?

When conducting substantive tests, sampling risk is the risk that an auditor concludes that a material misstatement does not exist when it actually does, or an auditor concludes that a material misstatement exists when it actually does not.

AS 2315 and AU-C 530 on Audit Sampling_______.

Which method would the auditor most likely use when the relevant data is clean or can be cleaned up easily?

Tolerable misstatement when performing a substantive test _______.

Which of the following is a characteristic of non-statistical sampling?

The auditor is most likely to use _______ when the data available is relevant to an audit assertion of interest.

The choice of using audit sampling vs.audit data analytics (ADA) is often a matter of what is most effective and efficient in determining whether an assertion is presented fairly, in all material respects.

The auditor is more likely to use audit sampling when internal controls are strong and reliable data does not exist to support audit data analytics (ADA).

In which of the following situations is the auditor most likely to use audit data analytics?

The auditor can _______.