Question 1

Which of the following sampling risks is associated with the use of attributes sampling?

Accepted Answer

A)  Risk of underreliance: Yes; Risk of incorrect rejection: Yes 
B)  Risk of underreliance: Yes; Risk of incorrect rejection: No 
C)  Risk of underreliance: No; Risk of incorrect rejection: Yes 
D)  Risk of underreliance: No; Risk of incorrect rejection: No

Question 2

An audit team would be most likely to use attributes sampling in which of the following situations?

Accepted Answer

A)  Performing analytical procedures during the planning stages of the audit 
B)  Evaluating management's integrity during the client acceptance process 
C)  Determining the effectiveness of the audit committee in evaluating the entity's control environment 
D)  Examining purchase requisitions for proper authorization

Question 3

With respect to the use of attributes sampling,in which of the following steps would nonstatistical sampling and statistical sampling differ?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 4

Why does the risk of overreliance have an inverse relationship with sample size?

Accepted Answer

A)  As the audit team expects fewer deviations from the control policy or procedure, the audit team can appropriately examine fewer items. 
B)  As the audit team is less concerned with making an incorrect conclusion with respect to reliance on the client's internal control, the audit team can appropriately examine fewer items. 
C)  As the level of control risk increases, the audit team is placing less reliance on internal control and can appropriately examine fewer items. 
D)  As the audit team requires greater compliance with the control policy or procedure, the audit team must examine a greater number of items.

Question 5

The upper limit rate of deviation in attributes sampling is

Accepted Answer

A)  the actual deviation rate in the population. 
B)  always less than the tolerable rate of deviation. 
C)  always greater than the tolerable rate of deviation. 
D)  a statistical calculation that considers sampling risk.

Question 6

The risk of underreliance is the risk that the sample selected to test controls

Accepted Answer

A)  does not support the auditor's planned level of control risk when the true operating effectiveness of the control justifies such an assessment. 
B)  contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transaction classes. 
C)  contains proportionally fewer monetary errors or deviations from prescribed control procedures than exist in the balance or class as a whole. 
D)  does not support the tolerable misstatement for some or all of management's assertions.

Question 7

An increase in which of the following would cause the sample size in a test of controls to decrease?

Accepted Answer

A)  Expected population deviation rate 
B)  Risk of overreliance 
C)  Risk of underreliance 
D)  Population size

Question 8

Assume that the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 1%,and desired to control the risk of overreliance to 10%.What is the appropriate sample size in this situation?

Accepted Answer

A)  77 items 
B)  93 items 
C)  132 items 
D)  124 items

Question 9

If the audit team established a tolerable rate of deviation of 3%,an expected population deviation rate of 2%,and desired to control the risk of overreliance to 5%,what sample size would be appropriate in this situation?

Accepted Answer

A)  390 items 
B)  568 items 
C)  590 items 
D)  846 items

Question 10

When considering the results of an attributes sampling application,the auditor compares which of the following two measures?

Accepted Answer

A)  upper limit rate of deviation; sample rate of deviation 
B)  tolerable rate of deviation; sample rate of deviation 
C)  expected rate of deviation; upper limit rate of deviation 
D)  upper limit rate of deviation; tolerable rate of deviation

Question 11

The risk of underreliance is the probability that the evidence in the sample indicates:

Accepted Answer

A)  Low control risk when the actual operating effectiveness of the control does not justify a low control risk assessment. 
B)  Low control risk when the actual operating effectiveness of the control justifies a low control risk assessment. 
C)  High control risk when the actual operating effectiveness of the control would justify a lower control risk assessment. 
D)  High control risk when the actual operating effectiveness of the control would justify a higher control risk assessment.

Question 12

If the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 3%,and desired to control the risk of overreliance to 5%,what sample size would be appropriate in this situation?

Accepted Answer

A)  132 items 
B)  195 items 
C)  258 items 
D)  361 items

Question 13

Which of the following statements is correct regarding nonstatistical sampling?

Accepted Answer

A)  Nonstatistical sampling must use random selection techniques. 
B)  The sample size when using nonstatistical sampling methods is generally not comparable to that determined using statistical sampling methods. 
C)  Nonstatistical sampling does not use a formal process to mathematically estimate the allowance for sampling risk. 
D)  When using nonstatistical sampling, the audit team is not required to select a sample that is representative of the population.

Question 14

The AICPA has developed sample size tables for attributes sampling that specifically incorporate all of the following factors except for the

Accepted Answer

A)  expected population deviation rate. 
B)  risk of overreliance. 
C)  tolerable rate of deviation. 
D)  sample rate of deviation.

Question 15

In planning a statistical sample for a test of controls,an auditor increased the expected population deviation rate from the rates observed in prior audits because of the results of prior tests of controls and the overall control environment.The auditor most likely would then increase the planned

Accepted Answer

A)  tolerable rate of deviation. 
B)  allowance for sampling risk. 
C)  risk of overreliance. 
D)  sample size.

Question 16

After examining sample items and classifying items as deviations,the auditor can divide the number of deviations by the sample size and calculate the

Accepted Answer

A)  expected population deviation rate. 
B)  risk of underreliance. 
C)  sample rate of deviation. 
D)  tolerable rate of deviation.

Question 17

Using the appropriate sampling tables,identify the missing data for each of the following independent attributes sampling applications.

Accepted Answer

The answer of Using the appropriate sampling tables,identify the missing...

Question 18

The audit team is planning to examine a sample of control policies and procedures.Assume that,based on the intended degree of reliance on internal control,the audit team wishes to control the risk of overreliance to 5%.In addition,based on prior engagements,the audit team anticipates an expected deviation rate of 2%.What would be the impact of reducing the tolerable rate of deviation from 7% to 5% on the sample size?

Accepted Answer

A)  Increase sample size by 181 items 
B)  Decrease sample size by 181 items 
C)  Increase sample size by 93 items 
D)  Decrease sample size by 93 items

Question 19

If the upper limit rate of deviation exceeds the tolerable rate of deviation,the auditor would most likely

Accepted Answer

A)  accept the account balance as fairly stated. 
B)  reject the account balance as fairly stated. 
C)  increase the planned effectiveness of substantive procedures. 
D)  not increase the planned effectiveness of substantive procedures.

Question 20

The sampling plan for nonstatistical sampling is the same as statistical sampling except for which of the following steps?

Accepted Answer

A)  Define the characteristic of interest. 
B)  Define the population. 
C)  Measure the sample items. 
D)  Evaluate the sample results.

Exam 18: Attributes Sampling