Question 1

Sampling risk results if the sample accurately represents the population.

Accepted Answer

Sampling risk arises from the possibility that the sample does not accurately represent the population, leading to incorrect conclusions.

Question 2

List the five steps in applying materiality in an audit.

Accepted Answer

The answer of List the five steps in applying materiality...

Question 3

The preliminary judgment on materiality is compared to the total estimated misstatement amount to determine if an account balance is materially misstated.

Accepted Answer

This statement is true. The preliminary judgment on materiality is compared to the total estimated misstatement amount to determine if the account balance is materially misstated or not. If the misstatement amount exceeds the preliminary judgment on materiality, then the account balance is considered materially misstated.

Question 4

If the auditor approaches the audit of the accounts in s sequential manner,the findings of the audit of accounts audited earlier can be used to revise the performance materiality established for accounts audited later.

Accepted Answer

The auditor can use the findings of the audit of accounts audited earlier to revise the performance materiality established for accounts audited later in a sequential audit approach. This is because the auditor may come across new information or changes in circumstances that may affect the risks and materiality of the accounts audited later. By revising the performance materiality, the auditor can ensure that the audit is focused on the areas with the highest risk of material misstatement.

Question 5

If the total misstatement of an account is known,a sampling error still needs to be determined.

Accepted Answer

If the total misstatement of an account is already known, then no sampling is needed and there is no room for sampling error. Sampling error occurs when a sample is used to estimate the misstatements in a population.

Question 6

Total estimated misstatements include known misstatements and projected misstatements plus a sampling error.

Accepted Answer

Total estimated misstatements include known misstatements and projected misstatements as well as a sampling error.

Question 7

When evaluating the audit findings,the auditor should be satisfied that the

Accepted Answer

The auditor should be satisfied that the estimate of the total known and likely misstatements is less than a material amount before issuing an unqualified opinion on the financial statements. Options A, C, and D are necessary steps but do not provide sufficient assurance regarding the overall financial statement presentation.

Quiz 8: Audit Planning and Analytical Procedures