Question 1

The confidence coefficients for ARIA are different from the confidence level.

Accepted Answer

Confidence coefficients for ARIA refer to the probability that the true population parameter falls within a certain interval of the sample statistic, while confidence level refers to the proportion of all possible samples that can be expected to include the true population parameter within a certain interval. Therefore, these two concepts are not the same.

Question 2

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the
A) sample mean.
B) standard deviation.
C) standard error of the sample mean.
D) estimated population total minus the actual population.

Accepted Answer

The population variability is measured by the standard deviation, as it measures the degree of variability or dispersion within a population. The other options mentioned are not relevant for measuring population variability.

Question 3

When using difference estimation, the precision interval is calculated by a statistical formula.

Accepted Answer

This is true. The precision interval is calculated using a statistical formula which takes into account the sample size, standard deviation, and level of confidence desired.

Question 4

There are four steps to generalize from the sample to the population using difference estimation sampling. Identify each of these four steps.

Accepted Answer

The answer of There are four steps to generalize from...

Question 5

To calculate the sample size using difference estimation sampling, it is not necessary for the auditors to have an advance population standard deviation estimate.

Accepted Answer

In difference estimation sampling, auditors often need an estimate of the population standard deviation or a similar measure of variability to calculate the required sample size accurately. This estimate helps in determining the precision and reliability of the sample results.

Question 6

The population standard deviation has a significant effect on the computed precision interval.

Accepted Answer

The answer of The population standard deviation has a significant...

Question 7

Auditors should attempt to minimize ARIA and maximize ARIR.

Accepted Answer

Auditors should attempt to minimize both Audit Risk of Incorrect Acceptance (ARIA) and Audit Risk of Incorrect Rejection (ARIR) to ensure the accuracy and reliability of the audit process.

Question 8

In difference estimation sampling, the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.

Accepted Answer

That statement is true. The confidence limits in difference estimation sampling are indeed calculated by combining the point estimate of the total misstatements with the computed precision interval at the desired level of confidence.

Question 9

Explain acceptable risk of incorrect acceptance and acceptable risk of incorrect rejection within the context of variables sampling.

Accepted Answer

The answer of Explain acceptable risk of incorrect acceptance and...

Question 10

Match between columns
                        Premises: the risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance exceeds the tolerable misstatement
a method of variables sampling in which the auditor estimates the population misstatement by multiplying the average misstatement in the sample by the total number of population items and also calculates sampling risk
the risk that the auditor is willing to take of rejecting a balance as incorrect when it is not misstated by a material amount
conclusions drawn from sample results based on knowledge of sampling distributions
a statistical sampling method that provides misstatement bounds expressed in monetary amounts
sampling techniques for tests of details of balances that use the statistical inference processes

Accepted Answer

The Answer of point estimate and difference estimation and misstatement is...

Quiz 17: Audit Sampling for Tests of Details of Balances