Question 1

When auditors wish to evaluate a sample statistically, an acceptable selection method is
A) systematic sample selection.
B) judgmental selection.
C) haphazard selection.
D) block sample selection.

Accepted Answer

Systematic sample selection ensures that every item in the population has an equal chance of being selected in the sample, which is a requirement for statistical evaluation. This method involves selecting every nth item from the population after a random starting point has been chosen. This reduces the risk of bias and increases the representativeness of the sample. Judgmental selection and haphazard selection can introduce bias, and block sample selection is appropriate only in certain circumstances.

Question 2

A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a
A) random sample.
B) statistical sample.
C) judgment sample.
D) representative sample.

Accepted Answer

A random sample is one in which every possible combination of items in the population has an equal chance of constituting the sample. This ensures that the sample is representative of the population and reduces bias in the sample selection process. The other options, statistical sample, judgment sample, and representative sample, do not necessarily entail random selection of items from the population.

Question 3

List the three phases in audit sampling for both statistical and nonstatistical sampling.

Accepted Answer

The answer of List the three phases in audit sampling...

Question 4

Which of the following statements regarding block sampling is least likely to be true?
A) Block sampling is the selection of several items in sequence.
B) It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used.
C) Only one block should be selected to increase the probability of a representative sample.
D) Once the first item in the block is selected, the remainder of the block is chosen automatically.

Accepted Answer

Selecting only one block would decrease the likelihood of a representative sample. Multiple blocks should be selected to increase the chances of a representative sample. Option A is true as block sampling involves selecting several items in sequence. Option B is also true as using too few or too many blocks can impact the accuracy of the sample. Option D is true as once the first item is selected, the remainder of the block is automatically chosen to maintain the sequence.

Question 5

Which is not a method used by auditors to generate random numbers?
A) electronic spreadsheets
B) systematic sample generators
C) random number generators
D) generalized audit software

Accepted Answer

Systematic sample generators are not used to generate random numbers. They are used to select a subset of items from a population in a structured, systematic manner. Electronic spreadsheets, random number generators, and generalized audit software can all be used to generate random numbers for auditing purposes.

Question 6

In performing a review of a client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of this technique is population items
A) may occur twice in the sample.
B) must be reordered in a systematic pattern before the sample can be drawn.
C) may occur in a systematic pattern, thus negating the randomness of the sample.
D) must be replaced in the population after sampling to permit valid statistical inference.

Accepted Answer

The primary disadvantage of systematic sample selection with a random start is that population items may occur in a systematic pattern, thus negating the randomness of the sample. This can lead to a biased sample and undermine the validity of statistical inference. To minimize this risk, auditors may use alternative sample selection methods, such as simple random sampling or stratified random sampling, depending on the specific audit objectives and population characteristics.

Question 7

The advantage of systematic sample selection is that
A) it is easy to use.
B) there is limited possibility of it being biased.
C) it is unnecessary to determine if the population is arranged randomly.
D) it automatically selects items material to the financial statements.

Accepted Answer

Systematic sampling is straightforward and easy to implement, as it involves selecting every nth item from a list or sequence.

Question 8

When a population is divided into subpopulations, usually by dollar size, and larger samples are taken from the subpopulation with the larger sizes, ________ is being used.
A) sampling with probability proportional to size
B) stratified sampling
C) block sampling
D) haphazard sampling

Accepted Answer

The answer of When a population is divided into subpopulations,...

Question 9

Describe the differences between statistical and nonstatistical sampling in terms of (1) the sample selection methods used, and (2) quantification of sampling risk.

Accepted Answer

The answer of Describe the differences between statistical and nonstatistical...

Question 10

The process which requires the calculation of an interval and then selects the items based on the size of the interval is
A) statistical sampling.
B) random sample selection.
C) systematic sample selection.
D) computerized sample selection.

Accepted Answer

The process described in the question is systematic sample selection, where after calculating the interval, every nth item is selected. Statistical sampling involves randomly selecting samples based on probability theory. Random sample selection involves selecting samples randomly from the population. Computerized sample selection is a method of selecting samples using computer algorithms.

Question 11

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

Accepted Answer

Systematic sample selection is a type of probabilistic sampling method where every nth element is selected from a list or population. Therefore, the statement is false.

Question 12

When selecting a sample, random numbers may be obtained either with replacement or without replacement. Although both selection methods are theoretically sound, auditors rarely use replacement sampling.

Accepted Answer

Auditors typically use sampling without replacement to avoid duplication and to ensure that each item has an equal chance of selection. Replacement sampling would introduce a bias towards items selected more than once.

Question 13

Which of the following methods of sample selection is appropriately used when selecting a random sample?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Which of the following methods of sample...

Question 14

Which of the following is a correct statement regarding block sampling?
A) It is acceptable to use block sampling only if a reasonable number of blocks are used.
B) Block sampling uses sampling with replacement.
C) Block sampling is a probabilistic sampling method.
D) There is considerable cost and time involved when block sampling is used.

Accepted Answer

Block sampling can be acceptable only if a sufficient number of blocks are used to ensure representative sampling. Using too few blocks may result in biased sampling.

Question 15

In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the
A) sampling interval.
B) tolerable exception rate.
C) computed upper exceptions rate.
D) mean.

Accepted Answer

The sampling interval is determined by dividing the population size by the desired sample size. This ensures that every nth item in the population is selected for the sample. Therefore, the correct answer is option A.

Question 16

The most serious shortcoming of the haphazard sample selection method is
A) it is not subject to statistical sampling methods.
B) it is time consuming to use.
C) it is costly to use.
D) it is difficult to remain completely unbiased in the selection.

Accepted Answer

The most serious shortcoming of the haphazard sample selection method is that it is difficult to remain completely unbiased in the selection. This can lead to a sample that is not representative of the population and can bias the results of the study.

Question 17

When the auditor goes through a population and selects items using nonprobabilistic selection methods, without regard to their size, source, or other distinguishing characteristics, it is called
A) block sample selection.
B) haphazard selection.
C) systematic sample selection.
D) statistical selection.

Accepted Answer

The method described is haphazard selection, which is a type of nonprobabilistic selection that does not take into account any specific characteristics of the items being selected.

Question 18

A 95 percent confidence level in statistical sampling means there is more than a 5 percent sampling risk which the auditor needs to address in the sampling design.

Accepted Answer

A 95 percent confidence level means that there is a 5 percent (or less) sampling risk, not more. Therefore, the auditor does not need to address sampling risk in the design of the sample at this confidence level.

Question 19

Simple random sampling
A) is used when there is a need to emphasize one or more types of population items.
B) requires both input and output parameters to be set when using a random number generator.
C) is generally used with replacement sampling.
D) is a probabilistic sampling method.

Accepted Answer

Simple random sampling is a probabilistic sampling method where each item in the population has an equal chance of being selected for the sample.

Question 20

Statistical sampling differs from nonstatistical sampling in that, by applying mathematical rules, the auditor can measure sampling risk in planning the sample; however, mathematical rules cannot then be applied in evaluating the sample results.

Accepted Answer

The statement in the question is incorrect. Mathematical rules can be applied in evaluating the sample results in statistical sampling. This is why statistical sampling is preferred over nonstatistical sampling as it allows for a more rigorous and objective approach to sampling.

Quiz 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

When auditors wish to evaluate a sample statistically, an acceptable selection method is

A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a

List the three phases in audit sampling for both statistical and nonstatistical sampling.

Which of the following statements regarding block sampling is least likely to be true?

Which is not a method used by auditors to generate random numbers?

In performing a review of a client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of this technique is population items

The advantage of systematic sample selection is that

When a population is divided into subpopulations, usually by dollar size, and larger samples are taken from the subpopulation with the larger sizes, ________ is being used.

Describe the differences between statistical and nonstatistical sampling in terms of (1) the sample selection methods used, and (2) quantification of sampling risk.

The process which requires the calculation of an interval and then selects the items based on the size of the interval is

Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method.

When selecting a sample, random numbers may be obtained either with replacement or without replacement. Although both selection methods are theoretically sound, auditors rarely use replacement sampling.

Which of the following methods of sample selection is appropriately used when selecting a random sample?

Which of the following is a correct statement regarding block sampling?

In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the

The most serious shortcoming of the haphazard sample selection method is

When the auditor goes through a population and selects items using nonprobabilistic selection methods, without regard to their size, source, or other distinguishing characteristics, it is called

A 95 percent confidence level in statistical sampling means there is more than a 5 percent sampling risk which the auditor needs to address in the sampling design.

Simple random sampling

Statistical sampling differs from nonstatistical sampling in that, by applying mathematical rules, the auditor can measure sampling risk in planning the sample; however, mathematical rules cannot then be applied in evaluating the sample results.