Question 1

Which of the following risks is related to effectiveness of testing?

Accepted Answer

A)   The risk of incorrect rejection.
B)   Inherent risk.
C)   The risk of incorrect acceptance.
D)   None of these.E) A) and B)
F) A) and C)

Question 2

Confidence level and sampling risk are related to sample size.

Accepted Answer

A) True 
 B)False

Question 3

Your manager, Sally, believes that nonstatistical sampling is the best method to use on the audit of YaYa Corporation. You, however, believe that statistical sampling is by far the better method. In addition, you have a great deal of training in the proper use of sampling techniques. Prepare an argument to convince Sally why statistical sampling should be used.

Accepted Answer

Statistical sampling permits the auditor...

Question 4

The computed upper deviation rate is

Accepted Answer

A)   The maximum rate of deviations that the auditor is willing to accept before deciding not to rely on the control.
B)   The rate of deviations that the auditor expects to occur in the population.
C)   A point estimate of the population deviation rate.
D)   The sum of the sample deviation rate and an appropriate allowance for sampling risk.E) A) and B)
F) B) and D)

Question 5

In determining the sample size for a test of controls, an auditor should consider the expected deviation rate, desired confidence level, and the

Accepted Answer

A)   Tolerable deviation rate.
B)   Risk of incorrect acceptance.
C)   Nature and cause of deviations.
D)   Population size.E) All of the above
F) C) and D)

Question 6

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

Accepted Answer

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

Question 7

For an attributes sampling plan, the tolerable deviation rate is 4%, the computed upper deviation rate is 7%, the sample deviation rate is 3%, and the risk of assessing control risk too low is 5%. Which of the following is true?

Accepted Answer

A)   The auditor must increase control risk because the risk of assessing control risk too low is greater than the tolerable deviation rate.
B)   The auditor is likely to increase control risk because the risk of assessing control risk too low is greater than the tolerable deviation rate.
C)   The auditor must increase control risk because the computed upper deviation rate is greater than the tolerable deviation rate.
D)   The auditor is likely to increase control risk because the computed upper deviation rate is greater than the tolerable deviation rate.E) A) and B)
F) A) and C)

Question 8

Which of the following statements is correct concerning statistical sampling in compliance testing?

Accepted Answer

A)   The population size has little or no effect on determining sample size except for very small populations.
B)   The expected population deviation rate has little or no effect on determining sample size except for very small populations.
C)   As the population size doubles, the sample size also should double.
D)   For a given tolerable deviation rate, a larger sample size should be selected as the expected population deviation rate decreases.E) B) and D)
F) B) and C)

Question 9

Define sampling risk and nonsampling risk.

Accepted Answer

Sampling risk refers to the possibility ...

Question 10

Audit sampling is commonly used for which type of audit evidence?

Accepted Answer

A)   Reperformance.
B)   Analytical procedures.
C)   Inquiry.
D)   Observation.E) A) and B)
F) C) and D)

Question 11

Which of the following combinations guarantees a larger sample size?

Accepted Answer

A)   Decrease the desired confidence level and decrease the tolerable deviation rate.
B)   Increase the desired confidence level and decrease the tolerable deviation rate.
C)   Decrease the desired confidence level and increase the expected deviation rate.
D)   Increase the tolerable deviation rate and increase the expected deviation rate.E) B) and D)
F) C) and D)

Question 12

Harvey Jones, CPA, uses statistical sampling to test control procedures. What is a benefit of using statistical sampling?

Accepted Answer

A)   It provides a means of mathematically measuring the sampling risk that result from examining only a part of the data.
B)   It eliminates the use of judgment required of Jones because the AICPA has established numerical criteria for this type of testing.
C)   It increases Jones' knowledge of the entity's prescribed procedures and their limitations.
D)   It is required by generally accepted auditing standards.E) None of the above
F) All of the above

Question 13

Audit sampling is commonly used to gather scanning audit evidence.

Accepted Answer

A) True 
 B)False

Question 14

A Type I error is the risk of incorrect acceptance.

Accepted Answer

A) True 
 B)False

Question 15

For a particular audit, the sample size for testing controls over the revenue cycle is relatively large. What can you infer about the desired confidence level, the tolerable deviation rate, and the expected population deviation rate?

Accepted Answer

There is a direct relationship between t...

Question 16

An auditor is testing internal control procedures that are evidenced on an entity's vouchers. To select the vouchers for testing, the auditor obtains random numbers between the first and last voucher number in the period. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher

Accepted Answer

A)   Constitutes a deviation.
B)   Has been properly voided.
C)   Cannot be located.
D)   Represents an immaterial dollar amount.E) B) and C)
F) None of the above

Question 17

A control is deemed to be more important than thought at the time that attributes sampling parameters were set. The auditor is most likely to respond by

Accepted Answer

A)   Decreasing the risk of assessing control risk too high.
B)   Increasing population size.
C)   Decreasing the tolerable deviation rate.
D)   Decreasing the expected deviation rate.E) All of the above
F) C) and D)

Question 18

If auditors conducting attributes sampling found that the entity deviated from a prescribed control in nine of the first 10 items examined, the auditor is most likely to

Accepted Answer

A)   Increase sample size.
B)   Increase the computed upper deviation rate.
C)   Decrease the tolerable deviation rate.
D)   Stop the test and increase control risk.E) B) and C)
F) A) and D)

Question 19

As a result of tests of controls, an auditor over relied on internal control and decreased substantive testing. This overreliance occurred because the true deviation rate in the population was

Accepted Answer

A)   Less than the risk of assessing control risk too low on the auditor's sample.
B)   Less than the deviation rate in the auditor's sample.
C)   More than the risk of assessing control risk too low on the auditor's sample.
D)   More than the deviation rate in the auditor's sample.E) A) and B)
F) A) and C)

Question 20

In addition to evaluating the frequency of deviations in tests of controls, an auditor should also consider certain qualitative aspects of the deviations. The auditor most likely would give broader consideration to the implications of a deviation if it was

Accepted Answer

A)   The only deviation discovered in the sample.
B)   Identical to a deviation discovered during the prior year's audit.
C)   Caused by an employee's oversight.
D)   Initially concealed by a forged document.E) A) and C)
F) A) and D)

Exam 8: Audit Sampling: An Overview and Application to Tests of Controls

Confidence level and sampling risk are related to sample size.

Correct Answer
verified

Which of the following risks is related to effectiveness of testing?

Correct Answer
verified

Which of the following statements is correct concerning statistical sampling in compliance testing?

Correct Answer
verified

A control is deemed to be more important than thought at the time that attributes sampling parameters were set. The auditor is most likely to respond by

Correct Answer
verified

Define sampling risk and nonsampling risk.

Correct Answer
verified
Sampling risk refers to the possibility ...
View Answer

If auditors conducting attributes sampling found that the entity deviated from a prescribed control in nine of the first 10 items examined, the auditor is most likely to

Correct Answer
verified

Correct Answer
verified
Statistical sampling permits the auditor...
View Answer

In addition to evaluating the frequency of deviations in tests of controls, an auditor should also consider certain qualitative aspects of the deviations. The auditor most likely would give broader consideration to the implications of a deviation if it was

Correct Answer
verified

For an attributes sampling plan, the tolerable deviation rate is 4%, the computed upper deviation rate is 7%, the sample deviation rate is 3%, and the risk of assessing control risk too low is 5%. Which of the following is true?

Correct Answer
verified

Audit sampling is commonly used to gather scanning audit evidence.

Correct Answer
verified

Correct Answer
verified

Which of the following combinations guarantees a larger sample size?

Correct Answer
verified

In determining the sample size for a test of controls, an auditor should consider the expected deviation rate, desired confidence level, and the

Correct Answer
verified

For a particular audit, the sample size for testing controls over the revenue cycle is relatively large. What can you infer about the desired confidence level, the tolerable deviation rate, and the expected population deviation rate?

Correct Answer
verified
There is a direct relationship between t...
View Answer

Harvey Jones, CPA, uses statistical sampling to test control procedures. What is a benefit of using statistical sampling?

Correct Answer
verified

Audit sampling is commonly used for which type of audit evidence?

Correct Answer
verified

As a result of tests of controls, an auditor over relied on internal control and decreased substantive testing. This overreliance occurred because the true deviation rate in the population was

Correct Answer
verified

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

Correct Answer
verified

A Type I error is the risk of incorrect acceptance.

Correct Answer
verified

The computed upper deviation rate is

Correct Answer
verified

Exam 8: Audit Sampling: An Overview and Application to Tests of Controls

Confidence level and sampling risk are related to sample size.

Correct AnswerverifiedShow Answer

Which of the following risks is related to effectiveness of testing?

Correct AnswerverifiedShow Answer

Which of the following statements is correct concerning statistical sampling in compliance testing?

Correct AnswerverifiedShow Answer

A control is deemed to be more important than thought at the time that attributes sampling parameters were set. The auditor is most likely to respond by

Correct AnswerverifiedShow Answer

Define sampling risk and nonsampling risk.

Correct AnswerverifiedSampling risk refers to the possibility ...View AnswerShow Answer

If auditors conducting attributes sampling found that the entity deviated from a prescribed control in nine of the first 10 items examined, the auditor is most likely to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedStatistical sampling permits the auditor...View AnswerShow Answer

In addition to evaluating the frequency of deviations in tests of controls, an auditor should also consider certain qualitative aspects of the deviations. The auditor most likely would give broader consideration to the implications of a deviation if it was

Correct AnswerverifiedShow Answer

For an attributes sampling plan, the tolerable deviation rate is 4%, the computed upper deviation rate is 7%, the sample deviation rate is 3%, and the risk of assessing control risk too low is 5%. Which of the following is true?

Correct AnswerverifiedShow Answer

Audit sampling is commonly used to gather scanning audit evidence.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following combinations guarantees a larger sample size?

Correct AnswerverifiedShow Answer

In determining the sample size for a test of controls, an auditor should consider the expected deviation rate, desired confidence level, and the

Correct AnswerverifiedShow Answer

For a particular audit, the sample size for testing controls over the revenue cycle is relatively large. What can you infer about the desired confidence level, the tolerable deviation rate, and the expected population deviation rate?

Correct AnswerverifiedThere is a direct relationship between t...View AnswerShow Answer

Harvey Jones, CPA, uses statistical sampling to test control procedures. What is a benefit of using statistical sampling?

Correct AnswerverifiedShow Answer

Audit sampling is commonly used for which type of audit evidence?

Correct AnswerverifiedShow Answer

As a result of tests of controls, an auditor over relied on internal control and decreased substantive testing. This overreliance occurred because the true deviation rate in the population was

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A Type I error is the risk of incorrect acceptance.

Correct AnswerverifiedShow Answer

The computed upper deviation rate is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Sampling risk refers to the possibility ...
View Answer

Correct Answer
verified

Correct Answer
verified
Statistical sampling permits the auditor...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
There is a direct relationship between t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified