Audit Sampling 50 Points

1/15/22, 1:25 PM Audit Sampling
Audit Sampling
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Which of the following is not a type of statistical method that provides 1 point
results in dollar terms? *
Variables sampling.
Attributes sampling.
Monetary-unit sampling.
Sampling with probability proportional to size.
Of the following statements, which one best differentiates statistical 1 point

sampling from nonstatistical sampling? *
Statistical sampling is a mathematical approach to inference, whereas nonstatistical

sampling is a more subjective approach.
Nonstatistical sampling has greater applicability to large populations than does

statistical sampling.
Nonstatistical sampling is more subjective, but produces greater consistency in the

application of audit judgment.
Nonstatistical sampling has greater applicability to populations that lend themselves

to random selection.
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Tolerable misstatement is used to: I. Determine sample size. II. Select the 1 point
sample. III. Evaluate results. *
Yes Yes No
No Yes No
No No Yes
Yes No Yes
Monetary unit sampling is also referred to as all of the following except: * 1 point
Attribute sampling.
Dollar unit sampling.
Cumulative monetary amount sampling.
Sampling with probability proportional to size.
The risk the auditor is willing to take of accepting a balance as correct 1 point
when the true misstatement in the balance under audit is greater than the
tolerable misstatement is: *
The upper bound.
The tolerable risk.
The acceptable risk of incorrect acceptance.
The lower bound.
The acceptable risk of incorrect acceptance is most related to: * 1 point
Audit efficiency.
Audit results.
Audit effectiveness.
Audit estimation.
It means an error that arises from an isolated event that has not recurred 1 point
other than on specifically identifiable occasions and is therefore not
representative of errors in the population *
Tolerable error
Anomalous error
Isolated error
Unexpected error
As the amount of misstatements expected in the population approaches 1 point

tolerable misstatement, the planned sample size will: *
Decrease.
Increase.
Vary based on characteristics of the population.
Be unaffected.
In conducting a substantive test of an account balance, an auditor 1 point

hypothesizes that no material error exists. The risk that sample results will
support the hypothesis when a material error actually does exist is the risk
of *
Incorrect rejection.
Alpha error.
Incorrect acceptance.
Type I error.
An auditor samples cash disbursement records for significant errors of $5 1 point
or more. Upon finding one such error, these records are scheduled for a
complete review. This conclusion is most likely based on a *
Cluster sample.
Discovery sample.
Systematic sample. .
Stratified sample
While performing a substantive test of details during an audit, the auditor 1 point
determined that the sample results supported the conclusion that the
recorded account balance was materially misstated. Which of the following
is not likely to be an acceptable reaction to this discovery? *
Perform expanded audit tests in the relevant areas
Increase detection risk in the relevant areas
Increase the sample size
Take no action until tests of other audit areas are completed
Which of the following best illustrates the concept of sampling risk? * 1 point
A randomly chosen sample may not be representative of the population as a whole on

the characteristic of interest.
An auditor may select audit procedures that are not appropriate to achieve the
specific objective.
An auditor may fail to recognize errors in the documents examined for the chosen
sample.
The documents related to the chosen sample may not be available for inspection.
Precision is defined as the range (plus or minus) within which the true 1 point
answer most likely falls. Reliability, also referred to as the confidence level,
is the likelihood that the sample range contains the true value. Of the
following statements concerning precision and reliability, which one is not
true? *
Precision is set by the auditor and is a function of materiality and risk.
The narrower the range of precision, the smaller the sample size.
An increase in control risk, other parameters remaining unchanged, causes a

narrowing of the precision range.
Overall audit risk is the complement of reliability.
What is the primary objective of using stratified sampling in auditing? * 1 point
To increase the confidence level at which a decision will be reached from the results
of the sample selected.
To determine the occurrence rate for a given characteristic in the population being
studied.
To decrease the effect of variance in the total population.
To determine the precision range of the sample selected.
Audit sampling is a required audit procedure. * 1 point
True
False
The variables sampling method which generally results in smaller sample 1 point
sizes than any other method is: *
Ratio estimation.
Difference estimation.
Mean-per-unit estimation.
The final step in the evaluation of the audit results is the decision to: * 1 point
Accept the population as fairly stated or to require further action.
Determine sampling error and calculate the estimated total population error.
Project the point estimate.
Determine the error in each sample.
An auditor performs a test to determine whether all merchandise for which 1 point
the client was billed was received. The population for this test consists of
all *
Merchandise received.
Vendors' invoices.
Canceled checks.
Receiving reports.
Sampling used for tests of details provides results in terms of: * 1 point
Exception rates.
Percentages.
Pesos
Expectation rates.
While performing a substantive test of details during an audit, the auditor 1 point
determined that the sample results supported the conclusion that the
recorded account balance was materially misstated. It was, in fact, not
materially misstated. This situation illustrates the risk of: *
Incorrect rejection.
Incorrect acceptance.
Assessing control risk too low.
Assessing control risk too high.
The method used to measure the estimated total error amount in a 1 point
population when there is both a recorded value and an audited value for
each item in the sample is: *
Difference estimation.
Mean-per-unit estimation.
Ratio estimation.
When errors are found, a common assumption in practice is to assume: * 1 point
A 100% assumption for all errors.
That the population errors are larger than the sample errors.
That the population errors are smaller than the sample errors.
That the actual sample errors are representative of the population errors.
Which of the following statements concerning alpha and beta risk is true? * 1 point
As alpha risk increases, beta risk decreases.
As inherent risk and/or control risk increase, beta risk should also increase.
As inherent risk and/or control risk increase, beta risk should decrease.
As a "rule of thumb," the auditor generally sets beta risk equal to or less than 10%,
inasmuch as it is the basis for the audit opinion.
What is the purpose of applying stratified sampling to a population? I. To 1 point
avoid items that may contain misstatements; II. To emphasize certain items
and deemphasize others *
Yes Yes
No No
Yes No
No Yes
In examining cash disbursements, an auditor plans to choose a sample 1 point
using systematic selection with a random start. The primary advantage of

such systematic selection is that population items *
Which include errors will not be overlooked when the auditor exercises compatible
reciprocal options.
May occur in a systematic pattern, thus making the sample more representative.
May occur more than once in a sample.
Do not have to be pre-numbered in order for the auditor to use the technique.
Which of the following is an element of sampling risk? * 1 point
Choosing an audit procedure that is inconsistent with the audit objective.
Choosing a sample size that is too small to achieve the sampling objective.
Failing to detect an error on a document that has been inspected by the auditor.
Failing to perform audit procedures that are required by the sampling plan.
In a probability proportional to size (PPS) sample, all population physical 1 point

audit units with an amount equal to or greater than the amount of the
interval will automatically be included in the sample if the auditor uses: *
Random selection.
Systematic selection.
Block selection.
Stratified selection.
An advantage of statistical over non-statistical sampling is that statistical 1 point

sampling: *
Enables auditors to objectively measure the reliability of their sample results.
Permits use of a smaller sample size than would be necessary with non-statistical
sampling.
Is compatible with a wider variety of sample selection methods than is non-statistical

sampling.
Allows auditors to inject their subjective judgment in determining sample size and
selection process in order to audit items of greatest value and highest risk.
Both sampling and nonsampling risks are associated with: Test of Controls; 1 point
Substantive Tests of Transactions. *
Yes Yes
No No
Yes No
No Yes
Which of the following is the auditor least likely to consider when 1 point
estimating misstatements in the population? *
Prior experience with the client.
Results of current year tests of controls.
Results of analytical procedures already performed.
Acceptable audit risk.
Which balance-related audit objective cannot be assessed using monetary 1 point

unit sampling? *
Accuracy.
Completeness.
Existence.
All of the above can be assessed using monetary unit sampling.
Sampling risk refers to the possibility that: * 1 point
The auditor may use a less than optimal statistical method for the circumstances, e.g.
difference estimation instead of ratio estimation.
The auditor may fail to recognize an error that is included in the sample.
Even though a sample is properly chosen, it may not be representative of the

population.
The confidence level and/or precision established by the auditor are not appropriate.
Auditors who prefer statistical to non-statistical sampling believe that the 1 point
principal advantage of statistical sampling flows from its unique ability to *
Define the precision required to provide adequate satisfaction.
Provide a mathematical measurement of risk.
Establish conclusive audit evidence with decreased audit effort.
Promote a more legally defensible procedural approach.
Which of the following is not a term relevant to sampling for tests of 1 point
details? *
Acceptable risk of incorrect rejection
Analysis of misstatements
Estimate misstatements in the population
Define the exception conditions
When auditors sample for tests of details of balances, the objective is to 1 point
determine whether the: *
Account balance being audited is fairly stated.
Transactions being audited are free of misstatements.
Controls being tested are operating effectively.
Transactions and account balances being audited are fairly stated.
Which of the following is not a likely item on which to apply stratification 1 point
techniques? *
aging of accounts receivable
dollar value of accounts receivable
customer names of account receivables
number of sales per customer in a period
The relationship between required sample size and the acceptable risk of 1 point
incorrect acceptance is: *
Inverse.
Direct.
Proportional.
Indeterminate.
Which of the following factors is generally not considered in determining 1 point

the sample size for a test of controls? *
Population size.
Tolerable rate.
Risk of underassessment.
Expected population occurrence rate.
The appropriate assumption to make regarding the overall percent of error 1 point
in those population items containing an error is: *
Determined using random number tables.
Set after a quantitative analysis of client’s internal control system.
Based on the auditor’s personal judgment in the circumstances.
Based on statistical analysis using confidence limits.
If an auditor concludes that internal controls are likely to be effective, the 1 point
preliminary assessment of control risk can be reduced, leading to a(n)
______ the acceptable risk of incorrect acceptance. *
Reduction in
Increase in
Elimination of
Increase or decrease
When using systematic selection procedures with monetary-unit sampling 1 point

of accounts receivable, the interval is determined by: *
Consulting a random number table.
Dividing the population size by the desired sample size.
Dividing the sample size by the account with the largest dollar value.
Dividing the population size by the account receivable with the largest dollar value.
Which of the following statements concerning sample size is true? * 1 point
An increase in the tolerable occurrence rate, other factors remaining unchanged,

increases sample size.
The higher the expected occurrence rate, other factors remaining unchanged, the
larger will be the sample size.
The more critical the attribute being tested, the higher will be the tolerable occurrence
rate set by the auditor, and the larger will be the sample size.
The lower the acceptable risk of underassessment of control risk, the smaller will be
the sample size.
Which of the following does not have to be considered in determining the 1 point
initial sample size of a test of details? *
tolerable misstatement
acceptable risk of incorrect rejection
estimate of misstatements in the population
acceptable audit risk
An auditor selects a statistical sample from a large inventory of 1 point

replacement parts. Which of the following audit objectives would be most
appropriate if the sampling method used is probability proportional to size
(PPS)? *
The auditor plans to estimate the total dollar value of the inventory when a recorded
book value does not exist.
The auditor plans to make a statement concerning the total dollar amount of error in
the population from the recorded book value.
The auditor wishes to accept or reject the hypothesis that the proportion of defective
parts in the population is less than 5%.
The auditor wishes to estimate the proportion of defective parts in the population.
If acceptable audit risk is increased, ARIA (Acceptable risk of incorrect 1 point

acceptance) should be: *
Increased.
Reduced.
Unaffected.
Modified.
The tolerable occurrence rate for a control test is generally * 1 point
Lower than the expected occurrence rate in the related accounting records.
Higher than the expected occurrence rate in the related accounting records.
Identical to the expected occurrence rate in the related accounting records.
Unrelated to the expected occurrence rate in the related accounting records.
The most commonly used method of statistical sampling for tests of 1 point
details of balances is: *
Attributes sampling.
Systematic sampling.
Discovery sampling.
Use of the ratio estimation sampling technique to estimated dollar 1 point

amounts is inappropriate when: *
The total book value is known and corresponds to the sum of all the individual book
values.
A book value for each sample item is unknown.
There are some observed differences between audited values and book values.
The audited values are nearly proportional to the book values.
If an auditor desires a greater level of assurance in auditing a balance, the 1 point

acceptable risk of incorrect acceptance: *
Is reduced.
Is increased.
Is not changed.
May be reduced or increased depending upon other circumstances.
In monetary-unit sampling, the relationship between tolerable 1 point

misstatement size and required sample size is: *
Direct.
Inverse.
Varied.
Indeterminable.
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1/15/22, 1:25 PM Audit Sampling

Your email will be recorded when you submit this form

Sampling with probability proportional to size.

Of the following statements, which one best differentiates statistical 1 point

Statistical sampling is a mathematical approach to inference, whereas nonstatistical

Nonstatistical sampling has greater applicability to large populations than does

Nonstatistical sampling is more subjective, but produces greater consistency in the

Nonstatistical sampling has greater applicability to populations that lend themselves

Dollar unit sampling.

Cumulative monetary amount sampling.

Sampling with probability proportional to size.

The upper bound.

The tolerable risk.

The acceptable risk of incorrect acceptance.

The lower bound.

The acceptable risk of incorrect acceptance is most related to: * 1 point

As the amount of misstatements expected in the population approaches 1 point

Vary based on characteristics of the population.

In conducting a substantive test of an account balance, an auditor 1 point

An auditor samples cash disbursement records for significant errors of $5 1 point

Perform expanded audit tests in the relevant areas

Increase detection risk in the relevant areas

Increase the sample size

Take no action until tests of other audit areas are completed

A randomly chosen sample may not be representative of the population as a whole on

Precision is set by the auditor and is a function of materiality and risk.

An increase in control risk, other parameters remaining unchanged, causes a

Overall audit risk is the complement of reliability.

What is the primary objective of using stratified sampling in auditing? * 1 point

To decrease the effect of variance in the total population.

To determine the precision range of the sample selected.

Audit sampling is a required audit procedure. * 1 point

Accept the population as fairly stated or to require further action.

Project the point estimate.

Determine the error in each sample.

Assessing control risk too low.

Assessing control risk too high.

When errors are found, a common assumption in practice is to assume: * 1 point

A 100% assumption for all errors.

As alpha risk increases, beta risk decreases.

What is the purpose of applying stratified sampling to a population? I. To 1 point

In examining cash disbursements, an auditor plans to choose a sample 1 point

using systematic selection with a random start. The primary advantage of

May occur more than once in a sample.

Which of the following is an element of sampling risk? * 1 point

Choosing an audit procedure that is inconsistent with the audit objective.

In a probability proportional to size (PPS) sample, all population physical 1 point

An advantage of statistical over non-statistical sampling is that statistical 1 point

Enables auditors to objectively measure the reliability of their sample results.

Is compatible with a wider variety of sample selection methods than is non-statistical

Substantive Tests of Transactions. *

Prior experience with the client.

Results of current year tests of controls.

Results of analytical procedures already performed.

Acceptable audit risk.

Which balance-related audit objective cannot be assessed using monetary 1 point

All of the above can be assessed using monetary unit sampling.

Sampling risk refers to the possibility that: * 1 point

Even though a sample is properly chosen, it may not be representative of the