Question 1

Sampling risk results from the auditor's failure to recognize exceptions in transaction data.

Accepted Answer

A) True 
 B)False

Question 2

When the SER exceeds the TER,the auditor should decide whether to increase sample size or to revise assessed control risk on the basis of cost versus benefit.

Accepted Answer

A) True 
 B)False

Question 3

In using sampling distribution for attributes,which one of the following must be known to evaluate the sample results?

Accepted Answer

A)  Estimated dollar value of the population 
B)  Standard exception of the values in the population 
C)  Actual exception rate of the attribute in the population 
D)  Sample size

Question 4

If the result obtained from a particular sample for control and substantive tests of transactions is critical to the formation of an audit opinion,which of the following is the most important to the auditor in concluding of the appropriateness and sufficiency of evidence gathered?

Accepted Answer

A)  Acceptable risk of overreliance 
B)  Estimated population exception rate 
C)  Tolerable exception rate 
D)  Size of the population

Question 5

Nonprobabilistic sampling methods are not based on mathematical probabilities and therefore the representativeness of the sample may be difficult to determine.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is most correct when using audit sampling for exception rates?

Accepted Answer

A)  Auditor is concerned with the lowest rate. 
B)  Auditor is concerned with the highest rate. 
C)  Auditor is concerned with the average on previous audits. 
D)  This doesn't impact the auditor's decision.

Question 7

Tolerable exception rate (TER)is inversely related to sample size.

Accepted Answer

A) True 
 B)False

Question 8

When auditors wish to evaluate a sample statistically,an acceptable selection method is:

Accepted Answer

A)  systematic sample selection. 
B)  judgmental selection. 
C)  haphazard selection. 
D)  block sample selection.

Question 9

Which of the following statements is not correct regarding probabilistic and nonprobabilistic sample selection?

Accepted Answer

A)  In probabilistic selection, every population item has a known chance of being selected. 
B)  It is acceptable to evaluate a nonprobabilistic sample using statistical methods. 
C)  Probabilistic selection is required for all statistical sampling methods. 
D)  Both methods are acceptable and commonly used.

Question 10

Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?

Accepted Answer

A)  Sampling risk 
B)  Nonsampling risk 
C)  Audit risk 
D)  Detection risk

Question 11

Match eight of the terms (a-k)with the definitions provided below (1-8):
a.Haphazard selection
b.Attributes sampling
c.Block sample selection
d.Judgmental sampling
e.Non-probabilistic sample selection
f.Probabilistic sample selection
g.Random sample
h.Representative sample
i.Statistical sampling
j.Systematic sample selection
k.Sampling distribution
________ 1.The use of mathematical measurement techniques to calculate formal statistical results and quantify sampling risk.
________ 2.A non-probabilistic method of sample selection in which items are selected in measured sequences.
________ 3.A sample whose characteristics are the same as those of the population.
________ 4.A statistical,probabilistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic of interest.
________ 5.A non-probabilistic method of sample selection in which items are chosen without regard to their size,source,or other distinguishing characteristics.
________ 6.An auditor selects items such that each population item has a known probability of being included in the sample.
________ 7.A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameters.
________ 8.A sample in which every possible combination of elements in the population has an equal chance of constituting the sample.

Accepted Answer

The answer of Match eight of the terms (a-k)with the...

Question 12

The upper limit of the interval estimate is also known as the confidence interval.

Accepted Answer

A) True 
 B)False

Question 13

In practice,auditors do not know whether a sample is representative,even after all testing is complete.

Accepted Answer

A) True 
 B)False

Question 14

A principal advantage of statistical methods of attributes sampling over nonstatistical methods is that they provide a scientific basis for establishing the:

Accepted Answer

A)  risk of assessing control risk too low. 
B)  tolerable exception rate. 
C)  expected population exception rate. 
D)  sample size.

Question 15

Whenever auditors use sampling,they risk making incorrect conclusions about the population.The risk that the auditor concludes that controls are nore effective than they actually are is known as the:

Accepted Answer

A)  risk of overreliance. 
B)  risk of underreliance. 
C)  risk that the sample is not representative of the population. 
D)  risk that the sample conclusions cannot be useful because of nonprobability sampling.

Question 16

Describe each of the four types of sample selection methods commonly associated with statistical audit sampling.

Accepted Answer

The answer of Describe each of the four types of...

Question 17

The most serious shortcoming of the haphazard sample selection method is:

Accepted Answer

A)  it is not subject to statistical sampling methods. 
B)  it is time consuming to use. 
C)  it is costly to use. 
D)  it is difficult to remain completely unbiased in the selection.

Question 18

Briefly explain why auditors utilize audit sampling.

Accepted Answer

The answer of Briefly explain why auditors utilize audit sampling....

Question 19

Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.

Accepted Answer

The answer of Discuss two causes of nonsampling risk.Also discuss...

Exam 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Sampling risk results from the auditor's failure to recognize exceptions in transaction data.

When the SER exceeds the TER,the auditor should decide whether to increase sample size or to revise assessed control risk on the basis of cost versus benefit.

In using sampling distribution for attributes,which one of the following must be known to evaluate the sample results?

If the result obtained from a particular sample for control and substantive tests of transactions is critical to the formation of an audit opinion,which of the following is the most important to the auditor in concluding of the appropriateness and sufficiency of evidence gathered?

Nonprobabilistic sampling methods are not based on mathematical probabilities and therefore the representativeness of the sample may be difficult to determine.

Which of the following is most correct when using audit sampling for exception rates?

Tolerable exception rate (TER)is inversely related to sample size.

When auditors wish to evaluate a sample statistically,an acceptable selection method is:

Which of the following statements is not correct regarding probabilistic and nonprobabilistic sample selection?

Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?

The upper limit of the interval estimate is also known as the confidence interval.

In practice,auditors do not know whether a sample is representative,even after all testing is complete.

A principal advantage of statistical methods of attributes sampling over nonstatistical methods is that they provide a scientific basis for establishing the:

Whenever auditors use sampling,they risk making incorrect conclusions about the population.The risk that the auditor concludes that controls are nore effective than they actually are is known as the:

Describe each of the four types of sample selection methods commonly associated with statistical audit sampling.

The most serious shortcoming of the haphazard sample selection method is:

Briefly explain why auditors utilize audit sampling.

Discuss two causes of nonsampling risk.Also discuss ways the auditor can control nonsampling risk.