Question 1

Population
- $\quad$ Size $= 10,000$ items
- Book value $= \$ 8,000,000$
- Tolerable misstatement $= \$ 300,000$
Sample
- $\quad$ Size $= 100$ items.
- Average book value of sample items $= \$ 795$
- Allowance for sampling risk $= \$ 220,000$
- Projected misstatement $= \$ 100,000$ overstatement
-The most likely amount of the misstatement is equal to:

Accepted Answer

The most likely amount of the misstatement is the projected misstatement of $100,000, as it directly reflects the overstatement identified from the sample.

Question 2

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all.
-Discovery sampling.

Accepted Answer

Discovery sampling is most effective in situations where auditors expect a very low rate of occurrence of a critical deviation, such as fraud. This approach is designed to "discover" instances of fraud or other significant issues by testing small samples of transactions or data.

Answer: B
 The classical variables sampling plan is a method that uses both audited and book values to estimate the total audited value of items in a sample. This approach is common in accounting and auditing, where auditors need to estimate the value of a large population of transactions based on a smaller sample.

Answer: C
 The most frequently used general method for sampling is the attribute sampling plan, which is designed to arrive at an estimated deviation rate. This approach is used when auditors want to determine the frequency or rate of a particular issue or problem within a larger population.

Answer: D
 Sampling units represent the individual elements in a sample population. Discovery sampling and other approaches may use various sampling units based on the needs and goals of the audit. Defining the sample unit as each individual dollar can be useful in certain situations, but may not be the best choice for all types of audits.

Answer: E
 The classical variables sampling plan is a method that enables auditors to estimate the average dollar value (or other variable) of items in a population by determining the average value of items in a sample. This approach is useful when auditors want to estimate the value of a larger population based on a smaller sample.

Question 3

Audit sampling is used in conjunction with many audit tests,and may be performed on a statistical or nonstatistical basis.
a.Define the term audit sampling.
b.List and explain two advantages of the use of statistical sampling as compared to nonstatistical sampling.

Accepted Answer

The answer of Audit sampling is used in conjunction with...

Question 4

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all.
-Ratio estimation sampling.

Accepted Answer

Ratio estimation sampling is a classical variables sampling method that utilizes both the audited (or actual) values and the book values of items in a sample to estimate the total audited value of the entire population. This approach is particularly useful in auditing financial statements, where the goal is to estimate the total value of a population based on a sample.

Question 5

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all.
-Difference estimation sampling.

Accepted Answer

Difference estimation sampling is a classical variables sampling method that compares the audited (or actual) values of items with their book values to estimate the total audited value of the population.

Question 6

Population
- $\quad$ Size $= 10,000$ items
- Book value $= \$ 8,000,000$
- Tolerable misstatement $= \$ 300,000$
Sample
- $\quad$ Size $= 100$ items.
- Average book value of sample items $= \$ 795$
- Allowance for sampling risk $= \$ 220,000$
- Projected misstatement $= \$ 100,000$ overstatement
-The average audited value in the sample is equal to:

Accepted Answer

The average audited value in the sample can be calculated by subtracting the projected misstatement per item from the average book value of sample items. The projected misstatement for the entire sample is $100,000, and the sample size is 100 items, so the projected misstatement per item is $1,000. The average book value of sample items is $795, so the average audited value is $795 - ($100,000 / 100) = $795 - $1,000 = -$205. However, this calculation seems incorrect based on the given options and the nature of the question. The correct approach is to understand that the projected misstatement is an overall overstatement, which means the actual value is less than the book value. Given the average book value of sample items is $795 and the projected misstatement for the sample is $100,000, we need to correct the calculation to reflect the relationship between book value, audited value, and misstatement correctly.The correct calculation should consider how the projected misstatement affects the relationship between the book value and the audited value, typically involving adjusting the total book value of the sample or understanding the misstatement in terms of its impact on the average value per item. Without additional specific details on how the misstatement is calculated or applied to individual items, the direct calculation provided does not lead to a correct answer based on the options given. The misunderstanding in the initial explanation points to a need for clarification or reevaluation of the calculation method used to find the average audited value.

Question 7

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all.
-Probability-proportional-to-size sampling.

Accepted Answer

Probability-proportional-to-size sampling defines the sampling unit as each individual dollar, focusing on larger transactions.

Question 8

Teal Corporation has 2,000 accounts receivable,with a total book value of $300,000.Ricardo Ramaro,CPA,has selected and audited a sample of 100 of the accounts with a combined book value of $16,100;the total of the audited values was $16,000.Using the mean-per-unit method,calculate the:
a.Accounts receivable estimated audited value.
b.Projected misstatement.

Accepted Answer

The answer of Teal Corporation has 2,000 accounts receivable,with a...

Question 9

The auditors are using mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith,Inc.Smith has 10,000 receivable accounts with a total book value of $800,000.The auditors estimate the population's standard deviation as being equal to $25.After examining the overall audit plan,the auditors believe that the account's tolerable misstatement is $40,000,and that a risk of incorrect rejection of .10 (risk coefficient = 1.64)and a risk of incorrect acceptance of .15 (risk coefficient = 1.04)should be used.
Required:
a.Calculate the required sample size.
Now ignore your sample size calculation in part "a," and assume that your answer was a sample size of 289 (the square root of 289 is 17)and that you obtained the following results:
Average audited value of items in sample: $76.50
Average book value of items in sample: $78
Standard Deviation in the sample (audited values): $24
Standard Deviation in the sample (book values): $26
b.Using mean-per-unit sampling,calculate the projected misstatement for the population.
c.Using mean-per-unit sampling,calculate the allowance for sampling risk and use it to form a statistical conclusion concerning the book value of the population ($800,000).That is,calculate an interval and either "accept" or "reject" the client's book value.

Accepted Answer

The answer of The auditors are using mean-per-unit sampling to...

Question 10

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all.
-Mean-per-unit estimation sampling.

Accepted Answer

Mean-per-unit estimation sampling is a classical variables sampling method that estimates the average value of items in a population by examining the average value of items in a sample, making it suitable for estimating the total dollar value of a population.

Question 11

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all.
-Attributes sampling.

Accepted Answer

Attributes sampling is used to estimate the rate of deviations from a prescribed control procedure, making it the method that arrives at an estimated deviation rate.

Quiz 9: Audit Sampling

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all. -Discovery sampling.

Audit sampling is used in conjunction with many audit tests,and may be performed on a statistical or nonstatistical basis. a.Define the term audit sampling. b.List and explain two advantages of the use of statistical sampling as compared to nonstatistical sampling.

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all. -Ratio estimation sampling.

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all. -Difference estimation sampling.

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all. -Probability-proportional-to-size sampling.

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all. -Mean-per-unit estimation sampling.

Auditors have a variety of sampling approaches available.For each approach in the first column,identify the correct statement in the second column.Each statement may be used once,more than once,or not at all. -Attributes sampling.