Question 1

Choosing sampling methods.
Identify the factors that an auditor would consider when choosing between non-statistical sampling and statistical sampling.

Accepted Answer

The answer of Choosing sampling methods.
Identify the factors that an...

Question 2

Which of the following occurs when, based on sample results, control risk is assessed excessively high?

Accepted Answer

A)  Audit inefficiency. 
B)  A less expensive audit. 
C)  Reduction of substantive testing. 
D)  Errors that are more likely to occur than anticipated.

Question 3

Which of the following applications are incorporated into statistical sampling?

Accepted Answer

A)  Binomial and confidence intervals. 
B)  Random and haphazard selection. 
C)  Hypergeometric distribution with audit risk. 
D)  Probability and statistical inference with audit judgment.

Question 4

In testing the reasonableness of an account balance, if MUS sampling cannot be used because of its limitations, what is an alternative statistical method?

Accepted Answer

A)  Attribute sampling. 
B)  Classical variables sampling. 
C)  Discovery sampling. 
D)  All of the above.

Question 5

The population is a group of items in an account balance that the auditor wants to test.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following task is not performed by generalized audit software?

Accepted Answer

A)  Footing a file. 
B)  Obtaining file statistics. 
C)  Checking for gaps in processing sequences. 
D)  Preparing custom reports. 
E)  All of the above tasks can be performed using GAS.

Question 7

In MUS sampling basic precision is the upper misstatement limit when no misstatements are detected in a MUS sample. It is computed by multiplying the sampling interval by the error expansion factor.

Accepted Answer

A) True 
 B)False

Question 8

When performing sampling, the auditor is most concerned with which of the following?

Accepted Answer

A)  Risk of incorrect rejection. 
B)  Risk of incorrect acceptance. 
C)  Risk of excess sample size. 
D)  Risk of errors in the population.

Question 9

The sample size decreases as the risk of over-reliance decreases.

Accepted Answer

A) True 
 B)False

Question 10

In testing account balances, haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

Accepted Answer

A)  Statistically sound. 
B)  Representative of the population. 
C)  Representative of the sample. 
D)  In the upper stratum.

Question 11

The auditor must define the population to which sampling relates if the auditor is to use statistical sampling for substantive tests of account balances.

Accepted Answer

A) True 
 B)False

Question 12

Tolerable misstatement is the maximum amount of misstatement the auditor can accept in the population without requiring an audit adjustment or a qualified audit opinion.

Accepted Answer

A) True 
 B)False

Question 13

Incorrect acceptance is directly related to which of the following?

Accepted Answer

A)  The efficiency of the audit. 
B)  The ineffectiveness of the audit. 
C)  The cost of the audit. 
D)  All of the above.

Question 14

When evaluating the MUS sample results, the auditor calculates the total estimated misstatement in the account balance based on the sampling process using which of the following components?

Accepted Answer

A)  Basic Precision. 
B)  Projected misstatement for items in lower-stratum. 
C)  Incremental Allowance for Sampling Error. 
D)  All of the above.

Question 15

MUS sampling has all of the following advantages over other statistical methods except which of the following?

Accepted Answer

A)  Easier to apply than other statistical sampling approaches. 
B)  Sample sizes are relatively small. 
C)  It is a relatively easy way to make sure that negative balances and zero balances are included in the sample. 
D)  Usually results in a highly efficient sample size.

Question 16

Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?

Accepted Answer

A)  Incorrect rejection. 
B)  Incorrect acceptance. 
C)  Insufficient sample size. 
D)  None of the above.

Question 17

Which of the following is a factor of nonsampling risk?

Accepted Answer

A)  Not carrying out the appropriate audit procedure. 
B)  Having a sample which does not represent the population. 
C)  Using a random sample selection 
D)  Using non-statistical sampling

Question 18

Random number, haphazard selection and block sampling are acceptable sample selection methods for non-statistical sampling.

Accepted Answer

A) True 
 B)False

Question 19

Evaluating misstatements when using sampling to test account balances.
Explain the term "misstatement" as it applies to sampling during substantive procedures and explain how the term may be interpreted differently by different auditors.

Accepted Answer

The answer of Evaluating misstatements when using sampling to test...

Question 20

Sampling risk deals with which of the following?

Accepted Answer

A)  Not carrying out the appropriate audit procedure. 
B)  Drawing an incorrect inference from the sample results. 
C)  Inappropriately diagnosing client's problems. 
D)  Both A and C.

Exam 8: Specialized Audit Tools: Sampling and Generalized Audit Software

Choosing sampling methods. Identify the factors that an auditor would consider when choosing between non-statistical sampling and statistical sampling.

Which of the following occurs when, based on sample results, control risk is assessed excessively high?

Which of the following applications are incorporated into statistical sampling?

In testing the reasonableness of an account balance, if MUS sampling cannot be used because of its limitations, what is an alternative statistical method?

The population is a group of items in an account balance that the auditor wants to test.

Which of the following task is not performed by generalized audit software?

In MUS sampling basic precision is the upper misstatement limit when no misstatements are detected in a MUS sample. It is computed by multiplying the sampling interval by the error expansion factor.

When performing sampling, the auditor is most concerned with which of the following?

The sample size decreases as the risk of over-reliance decreases.

In testing account balances, haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

The auditor must define the population to which sampling relates if the auditor is to use statistical sampling for substantive tests of account balances.

Tolerable misstatement is the maximum amount of misstatement the auditor can accept in the population without requiring an audit adjustment or a qualified audit opinion.

Incorrect acceptance is directly related to which of the following?

When evaluating the MUS sample results, the auditor calculates the total estimated misstatement in the account balance based on the sampling process using which of the following components?

MUS sampling has all of the following advantages over other statistical methods except which of the following?

Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?

Which of the following is a factor of nonsampling risk?

Random number, haphazard selection and block sampling are acceptable sample selection methods for non-statistical sampling.

Evaluating misstatements when using sampling to test account balances. Explain the term "misstatement" as it applies to sampling during substantive procedures and explain how the term may be interpreted differently by different auditors.

Sampling risk deals with which of the following?