Quiz
Week 9
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Questions in this quiz (16)
1An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to:
- AMinimise the failure to detect errors and fraud
- BEliminate the risk of non-sampling errors
- CDesign more effective audit procedures
- DMeasure the sufficiency of evidential matter by quantifying sampling risk
2Which of the following is an element of sampling risk?
- AChoosing an audit procedure that is inconsistent with the audit objective
- BChoosing a sample size that is too small to achieve the sampling objective
- CThe auditor failing to detect an error on a document in the sample
- DFailing to perform audit procedures
3Which of the following best illustrates the concept of sampling risk?
- AThe documents related to the chosen sample may not be available to the auditor for inspection
- BAn auditor may fail to recognize errors in the documents from the sample
- CA randomly chosen sample may not be representative of the population as a whole for the characteristic of interest
- DAn auditor may select audit procedures that are not appropriate to achieve the specific objective
4The auditor’s failure to recognize a misstatement in an amount or a control deviation is described as:
- AA statistical error
- BA sampling error
- CA standard error of the mean
- DA non-sampling error
5An auditor uses audit sampling to perform tests of controls in the acquisition and payment cycle. Those tests indicate that the related controls are operating effectively. The auditor plans to use sampling to perform tests of details of balances for account payable. The auditor’s allowable risk of incorrect acceptance (ARIA) for the tests of details of balances for accounts payable is most likely to be:
- AThe same as the ARO for tests of controls
- BGreater than the ARO for tests of controls
- CLess than the ARO for tests for controls
- DTotally independent of the AO used for tests of controls
6How should an auditor determine the tolerable misstatement required in establishing an audit sampling plan?
- ABy the materiality of an allowable margin misstatement the auditor is willing to accept
- BBy the amount of reliance the auditor will place on the results of the sample
- CBy reliance on a table of random numbers
- DBy the amount of risk the auditor is willing to take that material misstatements will occur in the accounting process
7If all the factors specified in a sampling plan remain constant, changing the ARO from 10% to 5% would cause the required sample size to:
- AIncrease
- BRemain the same
- CDecrease
- DBecome indeterminate
8If all other factors specified in a sampling plan remain constant, changing the TDR from 8% to 12% would cause the required sample size to:
- AIncrease
- BRemain the same
- CDecrease
- DBecome indeterminate
9If an auditor wishes to select a random sample that must have a 10% ARO and a TDR of 10%, the size of the sample he or she must select will decrease as the estimate:
- AThe population deviation rate increases
- BThe population deviation rate decreases
- CThe population size increases
- DThe ARO increases
10In planning a statistical sample for test of controls, an auditor increases the expected population deviation rate from the prior year’s rates because of the results of the prior year’s tests of controls. As a result, the auditor would most likely increase the planned:
- ATolerable deviation rate
- BAllowable for sampling risk
- CAllowable risk of overreliance
- DSample size
11From a random sample of items listed from a client’s inventory count, an auditor estimates with a 90% confidence level that the CUDR is between 4% and 6%. The auditors major concern is that there is 1 chance in 20 that the true deviation rate in the population is:
- AMore than 6%
- BLess than 6%
- CMore than 4%
- DLess than 4%
12If, from a random sample, an auditor can state with a 5% ARO that the deviation ate in the population doesn’t exceed 20%, he or she can state than the deviation rate doesn’t exceed 25% with:
- A5% risk
- BRisk greater than 5%
- CRisk less than 5%
- DThis cannot be determined from the information provided
13As a result of tests of controls, an auditor assessed control risk too low (overrelied on controls) and decreased substantive tests. This assessment occurred because the true deviation rate in the population was:
- ALess than the risk of overreliance, based on the auditor’s sample
- BLess than the deviation rate in the auditor’s sample
- CMore than the risk of overreliance, based on the auditor’s sample
- DMore than the deviation rate in the auditor’s sample
14Mr Murray decides to use stratified sampling. The reason for using stratified sampling rather than unrestricted random sampling to:
- AReduce as much as possible the degree of variability in the overall population
- BGive every element in the population an equal chance of being included in the sample
- CAllow the person selecting the sample to use his or her own judgment in deciding which elements should be included in the sample
- DAllow the auditor to emphasize larger items for the population
15In an audit of financial statements, auditor will generally find stratified sampling techniques to be most applicable to:
- ARecalculating net wage and salary payments to employees
- BTracing hours worked form the payroll summary
- CConfirming account receivable for residential customers at a large electric utility
- DReviewing supporting documentation for additions to plant and equipment
16From the prior experience, an auditor is aware that the accounts receivable trial balance contains a few unusually large balances. In using statistical sampling, the auditor’s best course of action is to:
- AEliminate any unusually large balances that appear in the sample
- BContinue to draw new samples until no unusually large balances appear in the sample
- CStratify the accounts receivable population so that the usually large balances are reviewed separately
- DIncrease the sample size to lessen the effect of the usually large balances.
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- tertiary Auditing Quiz on Week 9, created by Em * on 23/05/2015.
- Author
- Em *
- Language
- English
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