Quiz
Audit Sampling
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Questions in this quiz (15)
1In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too high relate to the [blank_start]efficiency of the audit[blank_end]
- Aefficiency of the audit
2If the achieved allowance for sampling risk of a statistical sample at a given reliability level is greater than the desired range, this is an indication that the standard deviation [blank_start]was larger than expected[blank_end].
- Awas larger than expected
3Auditor initially planned to use unrestricted random sampling with replacement when testing AR. Later, the auditor decided to use unrestricted random sampling without replacement. As a result only of this decision, the sample size should [blank_start]decrease[blank_end].
- Adecrease
4In which of the following cases would the auditor be most likely to conclude that all of the items in an account under consideration should be examined rather than tested on a sample basis?
- AThe measure of Error frequency is
tolerable error is expected to be
Large Low - BSmall High
- CLarge High
- DSmall Low
- AThe measure of Error frequency is
5An advantage of using statistical sampling is that such techniques [blank_start]mathematically measure risk[blank_end].
- Amathematically measure risk
6In comparison with probability-proportional-to-size (PPS) sampling, which of the following is an advantage of classical variables sampling in auditing?
- AIf no errors are expected, classical variables sampling usually results in a smaller sample size than PPS sampling
- BA classical variables sample can be designed more easily and sample selection can begin before the complete population is available
- CIf there are many individual differences between recorded and audited amounts in the population, classical variables sampling may result in a smaller sample size
- DClassical variables sampling automatically results in a stratified sample because items are selected in proportion to their dollar amounts
7In a variables sampling plan, an auditor must generally consider each of the following except
- AVariation within the population.
- BAcceptable risk of incorrect acceptance.
- CTolerable error.
- DPopulation size.
8In assessing the risk of incorrect acceptance, an auditor should consider each of the following except
- AAudit risk.
- BThe risk that internal control structure fails to detect material errors that occur.
- CTolerable error.
- DThe risk that analytical procedures and other tests fail to detect material errors that occur and that are not detected by internal control.
9An auditor is evaluating the results of a variables sampling plan. Which of the following is not relevant to the auditor's judgment about the sample?
- AManagement's explanations for why errors in the sample occurred
- BProjecting the sample error to the population
- CConsidering the effects of sampling risk
- DQualitative information that lends insight into errors found
10Several conditions must be met before an auditor applies either difference or ratio estimation. Which of the following is not one of these conditions?
- AEach population item must have a recorded book value
- BThe auditor must not expect understatement errors
- CTotal population book value must be known and must correspond to the sum of all individual population items
- DExpected differences between audited and recorded book values must not be too rare
11An auditor is applying a difference estimation sampling plan. Assuming the risk of incorrect rejection is .10, and the risk of incorrect acceptance is .05, what is the ratio of desired allowance for sampling risk to tolerable error? [blank_start].5[blank_end]
- A.5
12Auditor is applying a difference estimation sampling plan. Assuming
.1 acceptable risk of incorrect rejection, .05 acceptable risk of incorrect acceptance, and $100,000 tolerable error, what is the auditor's desired allowance for sampling risk? [blank_start]$50,000[blank_end]- A$50,000
13An auditor is applying a difference estimation sampling plan. Recorded book value is $1,000,000, and the auditor estimates a $75,000 understatement difference. In this case, the auditor's estimated population value is [blank_start]$1,075,000[blank_end]
- A$1,075,000
14An auditor is applying mean-per-unit estimation. Assuming estimated audited value is $950,000, the achieved allowance for sampling risk is $75,000, and recorded book value is $925,000, what is the auditor's conclusion?
- ARecorded book value is not likely misstated by a material amount.
- BRecorded book value is misstated by a material amount.
- CRecorded book value is not likely misstated by a material amount, assuming the client records an adjusting journal entry equal to the allowance for sampling risk.
- DThere is insufficient evidence to reach a conclusion.
15In comparison with classical variables sampling, which of the following is an advantage of probability-proportional-to-size (PPS) sampling?
- APPS sampling automatically results in a stratified sample
- BPPS sampling results in a smaller sample size if many differences are expected between audited and recorded amounts
- CPPS sampling is particularly appropriate when understatement errors are expected
- DPPS sampling is less likely to overstate the allowance for sampling risk when errors are found in the sample
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- Michelle Mendiola
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