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Exam 18: Attributes Sampling

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Question 1

Multiple Choice

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If the auditor were interested in ensuring that all sales have been recorded,the population would be defined as:

A) Entries in the cash receipts journal.
B) Entries in the general journal.
C) Remittance advices.
D) Shipping documents.

E) A) and C)
F) None of the above

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D

Question 2

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Indicate whether each of the following represents an application of a statistical (S)or nonstatistical (N)sampling application. 1____.In order to begin testing the occurrence assertion for Bear's sales invoices,Lion determined the expected population deviation rate to be 1.25%,the tolerable rate of deviation to be 4% and the risk of overreliance to be 5%. 2____.Lion determined the tolerable rate of deviation to be low while testing controls concerning loan agreements.The audit team considered the sample size provided by the AICPA tables but decided that more loans needed to be tested to accurately evaluate the population. 3____.To test the accuracy of Bear's accounts receivable,Lion ordered the accounts into an aging list and selected the last fifty items for examination. 4____.A list of pre-numbered purchase orders was used to test the completeness assertion.Lion decided to randomly select items from the list for examination by identifying them from a perusal of files. 5____.Lion suspected the existence of fraud in Bear's payroll department.As a result,Lion set the expected population deviation rate at zero and used quantitative measures to ensure that sampling risk was controlled to acceptable levels. 6____.Lion used professional judgment to estimate the allowance for sampling risk to determine the likely rate of deviation in the population when testing the cutoff of Bear's sales invoices.

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1.S; 2.N; ...

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Question 3

Multiple Choice

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In performing tests of controls over authorization of cash disbursements,which of the following statistical sampling methods would be most appropriate?

  Using a random number table, Walters identified a series of 50 numbers and located the corresponding employee identification number to select time cards for examination.

The sampling plan for nonstatistical sampling is the same as statistical sampling except for which of the following steps?

A sampling plan in which an initial sample is selected and the audit team either draws a final conclusion or selects additional items before drawing a final conclusion is called

Mary Todd is auditing White House Furniture.In selecting a sample of purchases,she finds that a purchase order is missing.She should

  To test the occurrence assertion regarding sales invoices, Walters randomly selected invoices from the database storage disk for examination.

Assume that the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 1%,and desired to control the risk of overreliance to 10%.What is the appropriate sample size in this situation?

An erroneous decision to assess control risk at excessively high levels can have an adverse effect on:

The risk of underreliance is the risk that the sample selected to test controls:

  Walters used a computer listing of T&T’s credit memos, which totaled 2,400 items, to select 4 random starting points for examination. The remaining memos were identified for testing by selecting every 24th item until the sample size reached 100 memos.

In performing attributes sampling,the auditor will conclude that the control is functioning as intended if the ______ is less than or equal to______.

After examining sample items and classifying items as deviations,the auditor can divide the number of deviations by the sample size and calculate the:

If an auditor tested 50 transactions and found two deviations from an important control activity,the auditor could conclude that:

When considering the results of an attributes sampling application,the auditor compares which of the following two measures?

The sample size for a test of controls varies inversely with:

When testing internal controls,which of the following statements is not true with respect to the use of nonstatistical sampling?

When selecting a sample of items to perform a test of controls,all of the following should be true of a representative sample,except

Which of the following statements is correct regarding an audit team's documentation requirements for attributes sampling?