Question 1

The set of all of the elements that comprise an account balance or a class of transactions is referred to as a ________.
A)sampling unit
B)sample
C)population unit
D)population

Accepted Answer

The set of all elements comprises an account balance or a class of transactions is referred to as a population. A sampling unit refers to a specific individual or object that is selected from a population for analysis. A sample is a subset of a population that is chosen for analysis. A population unit is not a commonly used term in statistics.

Question 2

If the association of population items with random numbers is difficult and expensive,but the auditor does not have sufficient knowledge about the population,the auditor should ________.
A)use nonstatistical sampling
B)use statistical sampling
C)use a computer to analyze the population and then decide which method to use
D)first determine the possible impacts of an error in the population on the financial statements to decide if sampling is reasonable

Accepted Answer

D

Question 3

In a sample-based audit of an account balance,which of the following combinations properly expresses the relationship between changes in the factors indicated and changes in sample size?
A) 
B) 
C) 
D)

Accepted Answer

B

Question 4

The risk model is defined as AR = IR  CR  DR.The risk of assessing control risk too low can lead to ________.
A)the auditor performing more work than needed,thus wasting resources
B)the auditor failing to do additional work that should be done
C)poor choice of procedures
D)expanding sample sizes required for statistical sampling of account balances

Accepted Answer

Assessing control risk too low means the auditor believes the internal controls are more effective than they actually are, which can lead to inadequate testing of the accuracy and completeness of financial statements. This increases the risk of material misstatement going undetected, which can have a significant impact on the financial statements. Therefore, the best choice is (B) the auditor failing to do additional work that should be done.

Question 5

The risk of assessing control risk too high is the risk that the evidence of compliance with control procedures in the sample indicates ________.
A)low control risk when the actual degree of compliance does not justify a low control risk assessment
B)low control risk when the actual degree of compliance justifies a low control risk assessment
C)high control risk when the actual degree of compliance would justify a lower control risk assessment
D)high control risk when the actual degree of compliance would justify a higher control risk assessment

Accepted Answer

Assessing control risk too high means the auditor believes the internal controls are less effective than they actually are, leading to unnecessary additional testing. Option C correctly describes this scenario, where the evidence suggests a higher control risk than warranted by the actual compliance level.

Question 6

Which of the following is used in attribute sampling to determine the sample size?
A)Sampling risk,sample deviation rate,and tolerable deviation rate.
B)Sampling risk,sample deviation rate,and expected population deviation rate.
C)Sampling risk,tolerable deviation rate,and expected population deviation rate.
D)Sample deviation rate,tolerable deviation rate,and expected population deviation rate.

Accepted Answer

The answer of Which of the following is used in...

Question 7

The probability that an auditor's conclusion based on a sample might differ from the auditor's conclusion based on an audit of the entire population identifies the concept of ________.
A)sampling risk
B)confidence levels
C)statistical sampling
D)tolerable rate and the expected deviation rate

Accepted Answer

Sampling risk is the risk that the auditor's conclusion based on a sample may be different from the conclusion they would reach if they audited the entire population. The other options listed are related to sampling, but do not directly address this concept.

Question 8

The purpose of tests of controls is to determine whether ________.
A)internal control policies and procedures are working as prescribed
B)substantive testing can be kept to a minimum
C)errors and irregularities are prevented or detected in a timely manner
D)the auditor has an understanding of the control system

Accepted Answer

Tests of controls are conducted to determine whether the internal control policies and procedures are working as prescribed. It helps the auditor to assess the reliability of the internal controls and to reduce the risk of material misstatements in the financial statements.

Question 9

An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to ________.
A)minimize the failure to detect errors and irregularities
B)eliminate the risk of nonsampling errors
C)reduce the level of audit risk and materiality to a relatively low amount
D)make a preliminary estimate of the appropriate sample size

Accepted Answer

Statistical sampling allows an auditor to use mathematical techniques to determine an appropriate sample size based on desired confidence levels and tolerances for error, thus making a preliminary estimate of the sample size more systematic and grounded in statistical theory.

Question 10

Detection risk is the risk that the auditor will not detect material misstatements in the accounts.To limit detection risk to an acceptable level,the auditor ________.
A)performs substantive tests
B)tests controls
C)gains an understanding of the internal control system
D)applies statistical methods

Accepted Answer

Substantive tests are specific procedures used by auditors to gather evidence to support the financial information in a company's financial statements. These tests are designed to determine whether there are any material misstatements in the accounts that have not been detected by the company's internal controls. Therefore, performing substantive tests can help limit the auditor's detection risk to an acceptable level. Testing controls and gaining an understanding of the internal control system are important components of an audit, but they are not directly related to limiting detection risk. Applying statistical methods can be helpful in certain audit procedures, but it is not the best choice for addressing detection risk.

Question 11

Which of the following courses of action is an auditor most likely to follow in designing a sampling plan for cash disbursements if the auditor is aware of several unusually large cash disbursements?
A)Increase the sample size to reduce the effect of the unusually large disbursements.
B)Continue to draw new samples until all the unusually large disbursements are included in the sample.
C)Set the tolerable deviation rate at a lower level than originally planned.
D)Stratify the cash disbursements population so that all of the unusually large disbursements are selected.

Accepted Answer

Stratifying the cash disbursements population would ensure that all of the unusually large disbursements are selected, which would increase the likelihood of detecting any potential errors or fraud related to those disbursements. Increasing the sample size may not be necessary if the unusually large disbursements are already included in the original sample. Continuing to draw new samples until all the unusually large disbursements are included could be time-consuming and inefficient. Setting the tolerable deviation rate at a lower level than originally planned may not necessarily address the issue of the unusually large disbursements.

Question 12

Which of the following audit procedures is NOT typically used in audit sampling applications?
A)Observation of personnel and procedures.
B)Physical count of tangible assets.
C)Recalculation.
D)Confirmation.

Accepted Answer

Observation of personnel and procedures is not typically used in audit sampling applications because audit sampling involves the selection and evaluation of a sample from a population to make a conclusion about that population. Observation is more about assessing the process or controls in place rather than evaluating the accuracy or existence of recorded amounts or transactions.

Question 13

For which of the following audit tests is an auditor most likely to use attribute sampling?
A)Making an independent estimate of the amount of a FIFO inventory.
B)Examining invoices in support of the valuation of fixed asset additions.
C)Selecting accounts receivable for confirmation of account balances.
D)Inspecting employee time cards for proper approval by supervisors.

Accepted Answer

Attribute sampling is used to test for the presence or absence of certain qualities or attributes in a sample of items. Inspecting employee time cards for proper approval by supervisors is an example of testing for a specific attribute (proper approval), making it the most likely scenario where attribute sampling would be used.

Question 14

Which of the following is a term used to describe a departure from a prescribed internal control procedure?
A)Exception.
B)Event.
C)Misstatement.
D)Known error.

Accepted Answer

An exception refers to a departure from a prescribed internal control procedure, and it must be reported and addressed to ensure the organization maintains effective control. Antworten

Question 15

In testing controls over invoices,an auditor discovers that in 10% of her statistical sample invoices were sent for full shipments,even if shipping documents suggested partial shipments.In this case,she would likely ________.
A)increase her sample size to determine the extent of the control weakness
B)recalculate control risk to determine if there is any effect on the nature,timing,or extent of her year-end procedures
C)conclude that controls are working at 90% effectiveness and classify control risk as low
D)consult with her partner to consider launching a fraud investigation

Accepted Answer

Finding a control weakness in a sample indicates a potential issue that may exist in all instances of the same control. Therefore, the auditor should increase her sample size to get a better understanding of the extent of the control weakness. This will allow her to determine if the weakness is widespread and requires further examination or if it is an isolated incident.

Question 16

Which of the following is an advantage of statistical sampling?
A)It permits a less rigid approach to unique audit problems.
B)It uses an evaluation method that allows evaluation of the sample on factors other than the sample evidence.
C)It permits auditors to use a computer to select a random sample.
D)It requires auditors to be exact in their judgments on risk and materiality.

Accepted Answer

The answer of Which of the following is an advantage...

Question 17

the risk of incorrect acceptance (RIA).Which of the following is true about RIR and RIA?
A)RIR is of greater concern to the auditor than the RIA.
B)RIA is of greater concern to the auditor than the RIR.
C)RIA and the RIR are of equal importance to the auditor.
D)Neither the RIR nor the RIA need be considered by the auditor.

Accepted Answer

RIA is of greater concern to the auditor than RIR, as it represents the risk of accepting a financial statement assertion as true when it is actually false. This could lead the auditor to issue an incorrect opinion, which could have significant consequences. RIR, on the other hand, represents the risk of rejecting a financial statement assertion as true when it is actually true, which would lead to additional audit work but is less consequential than issuing an incorrect opinion. Therefore, RIA is of greater importance to the auditor.

Question 18

Nonstatistical sampling may be better to use than statistical sampling when ________.
A)the auditor has insufficient knowledge about the population to take a statistical sample
B)the inherent risk of error in the population is low
C)the population is known to be diverse,with a high inherent risk of error
D)auditors are not technically proficient in sampling

Accepted Answer

The answer of Nonstatistical sampling may be better to use...

Question 19

Which description best illustrates sampling risk?
A)Applying audit procedures that are inappropriate for the audit objectives.
B)Failing to recognize errors or deviations in the documents examined.
C)Arriving at incorrect statistical conclusions because of computational errors.
D)Choosing a sample that does not represent the population.

Accepted Answer

Sampling risk refers to the risk that the sample chosen does not represent the population as a whole. The other options describe other types of audit risks, such as detection risk (B), audit risk (A), and nonsampling risk (C).

Question 20

As a result of tests of controls,an auditor assessed control risk too low and decreased substantive testing.This assessment resulted because the true deviation rate in the population was ________.
A)more than the risk of assessing control risk too low based on the auditor's sample
B)less than the risk of assessing control risk too low based on the auditor's sample
C)more than the deviation rate in the auditor's sample
D)less than the deviation rate in the auditor's sample

Accepted Answer

The auditor assessed control risk too low because the true deviation rate in the population was more than the deviation rate observed in the auditor's sample. This led to an underestimation of the risk and a decrease in substantive testing.

Quiz 10: Audit Sampling

The set of all of the elements that comprise an account balance or a class of transactions is referred to as a ________.

If the association of population items with random numbers is difficult and expensive,but the auditor does not have sufficient knowledge about the population,the auditor should ________.

In a sample-based audit of an account balance,which of the following combinations properly expresses the relationship between changes in the factors indicated and changes in sample size?

The risk model is defined as AR = IR  CR  DR.The risk of assessing control risk too low can lead to ________.

The risk of assessing control risk too high is the risk that the evidence of compliance with control procedures in the sample indicates ________.

Which of the following is used in attribute sampling to determine the sample size?

The probability that an auditor's conclusion based on a sample might differ from the auditor's conclusion based on an audit of the entire population identifies the concept of ________.

The purpose of tests of controls is to determine whether ________.

An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to ________.

Detection risk is the risk that the auditor will not detect material misstatements in the accounts.To limit detection risk to an acceptable level,the auditor ________.

Which of the following courses of action is an auditor most likely to follow in designing a sampling plan for cash disbursements if the auditor is aware of several unusually large cash disbursements?

Which of the following audit procedures is NOT typically used in audit sampling applications?

For which of the following audit tests is an auditor most likely to use attribute sampling?

Which of the following is a term used to describe a departure from a prescribed internal control procedure?

In testing controls over invoices,an auditor discovers that in 10% of her statistical sample invoices were sent for full shipments,even if shipping documents suggested partial shipments.In this case,she would likely ________.

Which of the following is an advantage of statistical sampling?

the risk of incorrect acceptance (RIA) .Which of the following is true about RIR and RIA?

Nonstatistical sampling may be better to use than statistical sampling when ________.

Which description best illustrates sampling risk?

As a result of tests of controls,an auditor assessed control risk too low and decreased substantive testing.This assessment resulted because the true deviation rate in the population was ________.