Question 1

The risk of incorrect acceptance of an account balance as correct,when in fact it is not correct,bears directly on the effectiveness of an audit.

Accepted Answer

A) True 
 B)False

Question 2

For tests of controls,the most commonly used statistical method is attributes sampling.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Which of the following tasks is not performed by data analytics tools?

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 data analytics tools.

Question 5

The sample size decreases as the risk of overreliance decreases.

Accepted Answer

A) True 
 B)False

Question 6

In selecting a sample for attributes testing,block sampling involves which of the following approaches?

Accepted Answer

A) Each item in the population having an equal chance of selection. 
B) Every nth item being selected after a random start. 
C) An arbitrary selection with no conscious bias. 
D) Selecting all items on a day or week.

Question 7

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 8

Which of the following is a method of reducing nonsampling risk?

Accepted Answer

A) Proper supervision and instruction of the client's employees. 
B) Proper supervision and instruction of the audit team. 
C) The use of attributes sampling rather than variables sampling. 
D) Controls to ensure that the sample drawn is random and representative.

Question 9

In analysis of the results of an attributes sampling plan,an auditor may determine that the sample size must be increased.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

Audit sampling is the application of an audit procedure to less than 100 percent of the items within an account balance or class of transactions for the purpose of evaluating some characteristic.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following does the design of a MUS sample not require the auditor to determine?

Accepted Answer

A) Risk of incorrect acceptance. 
B) Inherent risk. 
C) Ratio of expected misstatement to tolerable misstatement. 
D) Ratio of tolerable misstatement to the total population value.

Question 14

In sampling for substantive tests of details,the population is a group of items in an account balance that the auditor wants to test.

Accepted Answer

A) True 
 B)False

Question 15

In attributes sampling,if the upper limit of the possible deviation rate exceeds the tolerable rate,the auditor can rely upon the control as being effective.

Accepted Answer

A) True 
 B)False

Question 16

Statistical sampling is used when an auditor chooses to examine all purchases of equipment exceeding $1,000.00 and to test the remaining items by analytical procedures.

Accepted Answer

A) True 
 B)False

Question 17

Application of MUS Explain why monetary unit sampling is not useful for detecting understatements.

Accepted Answer

The answer of Application of MUS Explain why monetary unit...

Question 18

In attributes sampling if the selected item cannot be located,the auditor should assume that the control procedure was not followed and assess that item as a failure.

Accepted Answer

A) True 
 B)False

Question 19

When planning a test of details using MUS sampling,tolerable misstatement is usually set at what level?

Accepted Answer

A) Higher than performance materiality. 
B) Lower than performance materiality 
C) Higher than the expected error amount. 
D) Lower than the expected error amount.

Question 20

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.

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

The risk of incorrect acceptance of an account balance as correct,when in fact it is not correct,bears directly on the effectiveness of an audit.

For tests of controls,the most commonly used statistical method is attributes sampling.

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

Which of the following tasks is not performed by data analytics tools?

The sample size decreases as the risk of overreliance decreases.

In selecting a sample for attributes testing,block sampling involves which of the following approaches?

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?

Which of the following is a method of reducing nonsampling risk?

In analysis of the results of an attributes sampling plan,an auditor may determine that the sample size must be increased.

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

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.

Audit sampling is the application of an audit procedure to less than 100 percent of the items within an account balance or class of transactions for the purpose of evaluating some characteristic.

Which of the following does the design of a MUS sample not require the auditor to determine?

In sampling for substantive tests of details,the population is a group of items in an account balance that the auditor wants to test.

In attributes sampling,if the upper limit of the possible deviation rate exceeds the tolerable rate,the auditor can rely upon the control as being effective.

Statistical sampling is used when an auditor chooses to examine all purchases of equipment exceeding $1,000.00 and to test the remaining items by analytical procedures.

Application of MUS Explain why monetary unit sampling is not useful for detecting understatements.

In attributes sampling if the selected item cannot be located,the auditor should assume that the control procedure was not followed and assess that item as a failure.

When planning a test of details using MUS sampling,tolerable misstatement is usually set at what level?

Which of the following applications are incorporated into statistical sampling?