Question 1

While auditors may use either statistical or nonstatistical sampling,some auditors restrict the use of nonstatistical sampling for what reason?

Accepted Answer

Nonstatistical sampling relies heavily on auditor judgement and is therefore considered less objective than statistical sampling, which uses probability theory to make sampling decisions. As a result, some auditors may choose to limit or avoid the use of nonstatistical sampling altogether to ensure a higher level of objectivity in their audit procedures.

Question 2

Which one of the following is not a typical step used to implement an attributes sampling plan?

Accepted Answer

The nonstatistical sampling method is not typically used in an attributes sampling plan. Instead, statistical sampling methods are used to ensure the sample is representative of the population. The other three options (A,B,C) are typical steps used in an attributes sampling plan.

Question 3

When performing attributes sampling,which of the following varies directly with the sample size?

Accepted Answer

The answer of When performing attributes sampling,which of the following...

Question 4

MUS is designed to test for which of the following?

Accepted Answer

MUS (Monetary Unit Sampling) is primarily designed to test for overstatements, as it focuses on larger dollar amounts which are more likely to be overstated.

Question 5

In analyzing misstatements using sampling techniques,the auditor should analyze the misstatements in what manners?

Accepted Answer

When analyzing misstatements using sampling techniques, the auditor should analyze the misstatements both qualitatively (nature of the misstatement) and quantitatively (dollar amount of the misstatement). This will give a complete understanding of the impact of the misstatements on the financial statements. Therefore, option A is the correct choice. B, C, and D are not appropriate ways of analyzing misstatements.

Question 6

When confirming receivables in testing for overstatements,assume that there are few or no misstatements expected and the selection will be based on the dollar value of individual items.Which of the following is the auditor most likely to use?

Accepted Answer

MUS (Monetary Unit Sampling) sampling is appropriate when there are few or no misstatements expected and the selection is based on the dollar value of individual items. MUS sampling is a statistical sampling method that is commonly used in confirmations of accounts receivable, as it allows auditors to efficiently identify overstated receivables while minimizing the risk of under-sampling. Stratified mean-per-unit sampling and ratio estimation sampling are typically used when auditors expect misstatements to be present, while attribute sampling is typically used to test for compliance with control procedures.

Question 7

Which one of the following issues need not be addressed when planning an audit sample to test control procedures?

Accepted Answer

The minimum failure rate is not relevant to planning an audit sample for testing control procedures. The other options are critical factors in determining an appropriate sample size and selection to achieve the audit objective while minimizing the risk of misstatement.

Question 8

MUS is based on which of following?

Accepted Answer

Monetary Unit Sampling (MUS) is primarily based on attributes sampling, where the attribute of interest is the monetary correctness of the transactions or balances in the financial statements.

Question 9

Which of the following statistical sampling methods is most commonly used to test control procedures?

Accepted Answer

Attributes sampling is the most commonly used statistical sampling method for testing control procedures. It involves assessing whether a population meets a specific characteristic or attribute by selecting a small sample and drawing conclusions about the entire population based on the results. This method is particularly useful for evaluating the effectiveness of internal controls and ensuring compliance with regulatory requirements. Variable sampling, ratio estimation sampling, and dollar unit sampling are typically used for substantive testing rather than control testing.

Question 10

The results of MUS sampling will be unacceptable when the total estimated misstatement exceeds which of the following?

Accepted Answer

The MUS sampling method is designed to provide reasonable assurance that the actual misstatement in the population is below the tolerable misstatement amount. If the estimated total misstatement exceeds the tolerable misstatement amount, the results of the sampling will be unacceptable.

Question 11

Which of the following applications are incorporated into statistical sampling?

Accepted Answer

The answer of Which of the following applications are incorporated...

Question 12

Which of the following is a method of reducing nonsampling risk?

Accepted Answer

Proper supervision and instruction of the audit team helps in reducing nonsampling risk by ensuring that audit procedures are performed correctly and that errors due to misunderstanding or misapplication of audit techniques are minimized.

Question 13

When planning a test of details using MUS sampling,tolerable misstatement is usually set at what level?

Accepted Answer

Tolerable misstatement is typically set at a lower level than performance materiality in MUS sampling. This is because MUS sampling is designed to provide a higher level of assurance over specific account balances by identifying any misstatements that are likely to cause a material misstatement in the financial statements. Therefore, a lower tolerable misstatement level is required to achieve this level of assurance.

Question 14

Which of the following is a factor that the auditor should consider when choosing between nonstatistical and statistical sampling?

Accepted Answer

All three factors (whether the audit staff is adequately trained in statistical sampling, whether the population is suitable for a random-based selection method, and whether the auditor wants a statistical measure of risk) are critical in determining whether to use nonstatistical or statistical sampling. Therefore, the best choice is D.

Question 15

In testing account balances,haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

Accepted Answer

Haphazard sampling is a non-statistical sampling method where the auditor selects items without using a structured approach or statistical techniques. However, the auditor still needs to ensure that the sample is representative of the population to draw valid conclusions. Therefore, the sample should be representative of the population, which is the best choice.

Question 16

Which of the following is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances?

Accepted Answer

The tolerable failure rate is the maximum rate of deviation from a prescribed control that an auditor is willing to accept without altering the planned reliance on that control. If the actual failure rate exceeds this level, the auditor would likely reassess the control risk.

Question 17

When determining sample size in attributes sampling,which of the following is usually true?

Accepted Answer

In attributes sampling, the population size is generally not a major factor in determining sample size, as the sample size is more influenced by the expected deviation rate and the tolerable deviation rate.

Question 18

When using MUS,an auditor found that the sampling interval should be $15,755.If selecting the sample manually,the auditor should round the sample interval to which of the following amounts?

Accepted Answer

When selecting the sample manually, it is recommended to round the sampling interval to the nearest lower multiple of 1,000. Therefore, the sampling interval should be rounded to $15,000. This ensures that the sample selection is systematic and unbiased. Rounding to $16,000 would result in oversampling, while rounding to $14,000 or $10,000 would result in undersampling.

Question 19

Which of the following is not an item the auditor needs to determine in designing sampling for substantive testing?

Accepted Answer

All of the other options - audit objective, method of selecting a sample, and expected misstatement conditions - are important factors that the auditor needs to consider when designing sampling for substantive testing. However, expected deviation rate is not relevant to substantive testing; it is a factor that is considered when designing sampling for tests of controls.

Question 20

Which of the following does the design of a MUS sample not require the auditor to determine?

Accepted Answer

The design of a MUS sample does not require the auditor to determine inherent risk. Inherent risk is a component of audit risk, but it is not directly related to the sampling method used. The other options listed (A, C, and D) are all important factors that the auditor must consider when designing a MUS sample.

Quiz 8: Specialized Audit Tools: Sampling and Generalized Audit Software