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For an attributes sampling plan,the tolerable deviation rate is 4.5%,the computed upper deviation rate is 7%,the sample deviation rate is 3%,and the desired confidence level is 95%.What is the allowance for sampling risk included in the computed upper deviation rate?


A) 1.5%.
B) 3%.
C) 4%.
D) 5%.

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

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Jones,CPA,believes the industry-wide deviation rate of client billing errors is 3% and has established a tolerable deviation rate of 5%.In the review of client invoices,Jones should use


A) Discovery sampling.
B) Attributes sampling.
C) Stratified sampling.
D) Variables sampling.

E) A) and D)
F) All of the above

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Which of the following statements is correct concerning statistical sampling in tests of controls?


A) As the population size increases, the sample size should increase proportionately.
B) Deviations from specific internal control procedures at a given rate ordinarily result in misstatements at a lower rate.
C) There is an inverse relationship between the expected population deviation rate and the sample size.
D) In determining tolerable deviation rate, an auditor considers detection risk and the sample size.

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

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Confidence level and sampling risk are related to sample size.

A) True
B) False

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When performing a test of controls with respect to control over cash receipts,an auditor may use a systematic sampling technique with a start at any randomly selected item.The biggest disadvantage of this type of sampling is that the items in the population


A) Must be systematically replaced in the population after sampling.
B) May systematically occur more than once in the sample.
C) Must be recorded in a systematic pattern before the sample can be drawn.
D) May occur in a systematic pattern, thus destroying the sample randomness.

E) B) and C)
F) C) and D)

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An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods


A) Afford greater assurance than a nonstatistical sample of equal size.
B) Provide an objective basis for quantitatively evaluating sample risks.
C) Can more easily convert the sample into a dual-purpose test useful for substantive testing.
D) Eliminate the need to use judgment in determining appropriate sample sizes.

E) A) and D)
F) All of the above

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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


A) Constitutes a deviation.
B) Has been properly voided.
C) Cannot be located.
D) Represents an immaterial dollar amount.

E) A) and C)
F) B) and C)

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When determining the sample size of accounts receivable to test,what are three factors that are important for you to consider?

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Three important inputs to determine samp...

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Identify the types of audit evidence that are tested using audit sampling techniques.

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Some audit procedures involve sampling,w...

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The term precision relates to


A) The difference between confidence level and estimated error.
B) The difference between confidence level and tolerable error.
C) The difference between expected and tolerable deviation rate.
D) The difference between expected and sample deviation rate.

E) B) and C)
F) A) and B)

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When testing automated IT controls,the auditor is most likely to do all of the following except:


A) Examine the IT software.
B) Increase sample size because the tolerable deviation rate tends to be higher for automated IT controls.
C) Test one or a few of each type of transaction.
D) Test general controls over system and program changes.

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

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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 best 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.

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Statistical sampling permits the auditor...

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Which of the following best illustrates the concept of sampling risk?


A) A randomly chosen sample may not be representative of the population as a whole (regarding the characteristic being tested) .
B) An auditor may select audit procedures that are not appropriate to achieve the specific objective.
C) An auditor may fail to recognize errors in the documents examined for the chosen sample.
D) The documents related to the chosen sample may not be available for inspection.

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

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Based on a 5% risk of assessing control risk too low,how would an auditor interpret a computed upper deviation rate of 7%?


A) The auditor is willing to accept a deviation rate of 7% before deciding not to rely on the control.
B) There is a 5% chance that the deviation rate in the population is less than 7%.
C) There is a 5% chance that the deviation rate in the population exceeds 7%.
D) There is a 95% chance that the deviation rate in the population equals 7%.

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

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Indicate which of the following audit procedures,used as tests of controls,do not involve audit sampling. 1.Observing and evaluating segregation of duties. 2.Testing of whether sales invoices are supported by authorized customer orders and shipping documents. 3.Reviewing client's procedures for accounting for the numerical sequence of shipping documents. 4.Examining sales orders for proper credit approval. 5.Recomputing the information on copies of sales invoices. 6.Comparing the average days outstanding in accounts receivable with industry averages.

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Audit procedures used as tests of contro...

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In attributes sampling,population size has little or no effect on sample size once the population exceeds approximately


A) 500.
B) 5,000.
C) 100,000.
D) 1,000,000.

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

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Audit sampling is not used for which type of audit evidence?


A) Inquiry.
B) Inspection of tangible assets.
C) Reperformance.
D) Confirmation.

E) None of the above
F) B) and D)

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Which of the following best describes the distinguishing feature of statistical sampling?


A) It requires the examination of a smaller number of supporting documents.
B) It provides a means for measuring mathematically the degree of uncertainty that results from examining only part of a population.
C) It reduces the problems associated with the auditor's judgment concerning materiality.
D) It is evaluated in terms of two parameters: statistical mean and random selection.

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

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A Type I error is the risk of incorrect acceptance.

A) True
B) False

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An underlying feature of random-based selection of items is that each


A) Stratum of the accounting population be given equal representation in the sample.
B) Item in the accounting population be randomly ordered.
C) Item in the accounting population should have an opportunity to be selected.
D) Item must be systematically selected using replacement.

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

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