FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Attributes Sampling

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

A) Increase inherent risk.
B) Increase overall materiality levels.
C) Decrease substantive procedures.
D) Decrease detection risk.

E) A) and D)
F) A) and C)

Correct Answer

verified

Show Answer

Question 72

Multiple Choice

Review LaterAdd Note

Review Later

For which of the following audit tests would an auditor most likely use attributes sampling?

A) Making an independent estimate of the amount of a LIFO inventory.
B) Examining invoices in support of the valuation of fixed asset additions.
C) Selecting accounts receivable for confirmation of account balances.
D) Inspecting employee time cards for proper approval by supervisors.

E) All of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 73

Multiple Choice

Review LaterAdd Note

Which of the following components of the audit risk model is most closely associated with attributes sampling?

Using AICPA sample evaluation tables,what is the conclusion from a statistical sample of internal controls when a sample of 125 documents indicates five deviations if the tolerable rate of deviation is 5 percent,the expected population deviation rate is 2 percent,and the allowance for sampling risk is 3 percent?

In determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized,an auditor should consider the tolerable rate of deviation from the control activity.The auditor should also consider: (1) Likely rate of deviations (2) Allowable risk of underreliance.

The auditor's sample results must yield higher upper limit rate of deviation in order to support lower levels of control risk.

Indicate how each of the following conditions affects sample size from the AICPA sample tables by using the letters I (increase),D (decrease),or N (no effect),holding all other factors constant. _____ 1.An increase in the expected population deviation rate from 2 percent to 5 percent _____ 2.A decrease in the population from 10,000 controls to 5,000 controls _____ 3.An increase in the tolerable rate of deviation from 3 percent to 10 percent _____ 4.An increase in the risk of underreliance from 5 percent to 10 percent _____ 5.A decrease in the risk of overreliance from 5 percent to 1 percent

In discovery sampling,the desired probability of one occurrence is defined as

Indicate how each of the following conditions affects the upper limit rate of deviation by using the letters I (increase),D (decrease),or N (no effect),holding all other factors constant. _____ 1.An increase in the tolerable rate of deviation from 2 percent to 5 percent. _____ 2.A decrease in the number of deviations from five to one. _____ 3.An increase in the risk of underreliance from 5 percent to 10 percent. _____ 4.A decrease in the risk of overreliance from 5 percent to 1 percent. _____ 5.An increase in the sample rate of deviation from 2.3 percent to 3.5 percent.

The interpretation of the upper limit rate of deviation in an attributes sampling application is

The risk of overreliance results in a(n)______________________ loss to the auditor.

The upper limit rate of deviation is equal to the sample rate of deviation minus the allowance for sampling risk.

In which step of a sampling plan is nonstatistical sampling different than statistical sampling?

An auditor is examining an important internal control in his audit of ABC Company.Because the account balance affected by this control is highly susceptible to fraud,he will reject the sample if even one deviation is discovered.What type of sampling plan should he use?

Discovery sampling is ordinarily used when deviations from control procedures occur at a relatively low rate and are extremely important in the audit examination.

An auditor who concludes that a control is functioning properly when,in fact,it is not has committed the

Based on the information in Question 69,the allowance for sampling risk was