Question 1

Population is divided into groups, each being fairly homogenous with respect to value and risk in this kind of sampling

Accepted Answer

A)  Block Selection
B)  Random Sampling
C)  Stratified Sampling
D)  Monetary Unit Sampling C

Question 2

The formula for calculating precision is

Accepted Answer

A)  (Materiality - Range of error possible)  x AMLE
B)  (Materiality - AML
E)   x Range of error possible
C)  (AMLE - Range of error possible)  x Materiality
D)  None of these B

Question 3

Which of the following statements is true about Precision

Accepted Answer

A)  It is a range of error in an account between MLE & materiality
B)  It is a range of error in an account between MLE & AMLE
C)  It is a range of error in an account between Materiality & AMLE
D)  None of these A

Question 4

If the desired overall assurance from audit is 95%, the inherent risk is 40% and the control risk is 50%, what would be the desired assurance from substantive tests

Accepted Answer

A)  90%
B)  95%
C)  99%
D)  75%

Question 5

The three components of Audit Risk as per the risk model are

Accepted Answer

A)  Inherent Risk, Control Risk, Mitigation Risk
B)  Inherent Risk, Control Risk, Litigation Risk
C)  Inherent Risk, Control Risk, Detection Risk
D)  None of these

Question 6

The materiality thresholds depend on the ____ of accounts and their _____.

Accepted Answer

A)  Basis, Sensitivity
B)  Sensitivity, relativity
C)  Basis, accountablity
D)  Basis, Value

Question 7

This is a technique that creates an equation to reveal how one variable is related to one or more other variables.

Accepted Answer

A)  Comparison across components
B)  Predictive Analysis
C)  Regression analysis
D)  Economic analysis

Question 8

There is a direct relationship between materiality level and the level of audit risk

Accepted Answer

A) True 
 B)False

Question 9

AMLE in the context of likely errors is used in this stage of audit

Accepted Answer

A)  Reporting
B)  Evaluation of results
C)  Planning
D)  Field Audit

Question 10

Planning materiality may be taken at a lower figure than reporting materiality.

Accepted Answer

A) True 
 B)False

Question 11

The point where the total value of errors in an account becomes unacceptable to audit is called

Accepted Answer

A)  Unacceptable level
B)  Materiality level
C)  Qualifiable Level
D)  None of these

Question 12

Which of the audit procedures is a form of inductive reasoning where the reasonableness of the aggregate results is inferred from the evidence of reliability of the individual details that are tested?

Accepted Answer

A)  Analytical Procedures
B)  Systems Based Audit
C)  Direct Substantive Testing
D)  All of the above

Question 13

Which kind of audit sampling is generally used for testing controls?

Accepted Answer

A)  Attribute Sampling
B)  Random Sampling
C)  Monetary Unit Sampling
D)  Stratified Sampling

Question 14

Risk assessment is primarily a part of which of these stages in the audit process?

Accepted Answer

A)  Planning
B)  Excecution
C)  Reporting
D)  Follow up

Question 15

what are the audit procedures commonly used to obtain audit assurance?

Accepted Answer

A)  Analytical Procedures
B)  Systems Based Audit
C)  Direct Substantive Testing
D)  All of the above

Question 16

Reflecting all the transactions relating to the period of the accounts without regard to the actual date of payment or receipt is also called

Accepted Answer

A)  Accrual system accounting
B)  Mercantile system of accounting
C)  Both A & B
D)  None of these

Question 17

Which method of sampling is not expected to produce representative samples?

Accepted Answer

A)  Block Selection
B)  Random Sampling
C)  Systematic Sampling
D)  Monetary Unit Sampling

Question 18

A pre-condition for any statistical sampling is the availability of a _______

Accepted Answer

A)  Sampling unit
B)  sampling frame
C)  Sampling structure
D)  All of the above

Question 19

Extrapolation of sampling results to the population is possible in the case of Judgmental Sampling.

Accepted Answer

A) True 
 B)False

Question 20

Which method of sampling is expected to produce representative samples?

Accepted Answer

A)  Block Selection
B)  Judgmental Sampling
C)  Random Sampling
D)  Convenient Sampling

Exam 2: Auditing and Sampling Techniques

Population is divided into groups, each being fairly homogenous with respect to value and risk in this kind of sampling

The formula for calculating precision is

Which of the following statements is true about Precision

If the desired overall assurance from audit is 95%, the inherent risk is 40% and the control risk is 50%, what would be the desired assurance from substantive tests

The three components of Audit Risk as per the risk model are

The materiality thresholds depend on the of accounts and their _.

This is a technique that creates an equation to reveal how one variable is related to one or more other variables.

There is a direct relationship between materiality level and the level of audit risk

AMLE in the context of likely errors is used in this stage of audit

Planning materiality may be taken at a lower figure than reporting materiality.

The point where the total value of errors in an account becomes unacceptable to audit is called

Which of the audit procedures is a form of inductive reasoning where the reasonableness of the aggregate results is inferred from the evidence of reliability of the individual details that are tested?

Which kind of audit sampling is generally used for testing controls?

Risk assessment is primarily a part of which of these stages in the audit process?

what are the audit procedures commonly used to obtain audit assurance?

Reflecting all the transactions relating to the period of the accounts without regard to the actual date of payment or receipt is also called

Which method of sampling is not expected to produce representative samples?

A pre-condition for any statistical sampling is the availability of a _______

Extrapolation of sampling results to the population is possible in the case of Judgmental Sampling.

Which method of sampling is expected to produce representative samples?