1. Nonsampling risk is the fact that the sample is not representative of the population.
True
False
Question 2
1. Auditing sampling is:
the selection of a sample of items from a population so that the auditor expects the sample and evaluation to be representative of the population.
the selection and evaluation of a sample of items from an account so that the auditor expects the sample to be representative of the account.
the selection and evaluation of a sample of items from a population so that the auditor expects the sample to be representative of the population.
the selection and observation of a sample of items from a population so that the auditor expects the sample to be representative of the population.
Question 3
1. With nonstatistical sampling, sampling risk is controlled by
quantifying sampling risk to keep the risk to an acceptable number
quantifying control risk to keep the risk to an acceptable number
selecting smaller sample sizes
taking a random sample so the sample is representative of the population
evaluating sample results to consider control risk in the evaluation of the results
Question 4
1. The auditor should consider which of the following factors in selecting the correct sample size?
A. More testing will be required for manual controls than automated controls because manual controls are more prone to human error. IT controls that have been tested should continue to be reliable.
B. The more transactions in a system, the more items need to be tested.
C. The more assurance we receive from other audit procedures, the less the control is tested.
D. The less susceptible the control is to management override, the more the control is tested.
E. The more frequently a control is performed, the less items are tested. More internal control tests are performed for controls that are performed monthly than for controls performed daily.
F. both A and C
G. both B and D
Question 5
1. A control deviation occurs when
the control has been performed but not efficiently
there is no indication that the control has been performed
the control has been performed but not effectively
there is no indication that the control exists
Question 6
1. To determine the sample size for tests of controls, the auditor needs to estimate the following information based on his professional judgment
the relative rate of deviation for the population to be tested
the realizable rate of deviation for the population to be tested
the desired level of assurance that the actual rate of deviation is not exceeded by the tolerable rate of deviation
the number of sampling units in the population if the population is very small, less than 500
Question 7
1. Systematic random sampling can only be used when
internal controls are present
the sampling units are prenumbered
internal controls are operating
random sampling can be used under any circumstances
Question 8
1. If the sample deviation rate is lower than the tolerable deviation rate, the auditor will
A. reduce the amount of control testing
B. assume controls are not working
C. assume the controls are working
D. reduce the amount of substantive testing
E. increase the amount of substantive testing
F. both A and C
G. both C and D
Question 9
1. The auditor uses professional judgment to estimate
the risk of underreliance
the sample interval
the desired control risk
the expected deviation rate
the actual deviation rate
Question 10
1. The auditor uses sampling for substantive tests of balances and for substantive tests of transactions to determine
whether the financial statements accounts associated with the account balance or class of transactions are materially misstated
whether the financial statements are materially misstated
whether the balance sheet accounts associated with the account balance or class of transactions are materially misstated
whether the income statement accounts associated with the account balance or class of transactions are materially misstated
Question 11
1. The risk of incorrect acceptance of the account balance or class of transactinos is an error that affects
the efficiency of the audit
the effectiveness of the audit
the reliability of the audit
the relevance of the audit
Question 12
1. The auditor must define the sampling unit in a way that is
consistent with the assertion being tested
consistent with the account balance being tested
consistent with the transaction being tested
consistent with the population being tested
Question 13
1. Which of the following is a statistical audit sampling technique that the auditor may decide to use?
A. judgmental sampling
B. haphazard sampling
C. monetary unit sampling
D. classical variables sampling
E. non random number sampling
F. both A and C
G. both C and D
Question 14
1. The auditor makes the decision about whether the misstatements found in a substantive test of balances sample are material after
determining if the misstatements are within the tolerance level
determining if the misstatements are within the assurance level
extrapolating misstatements from the sample to the population
projecting misstatements from the sample to the population
Question 15
1. With monetary unit sampling
each individual interval in the population has an equal chance of being selected
each individual dollar in the population has an equal chance of being selected
each interval of dollars in the population has an equal chance of being selected
each dollar within the interval in the population has an equal chance of being selected
Question 16
1. Tolerable misstatement is
A. A matter of professional judgment
B. amount of misstatement, on the basis of the auditor’s professional judgment, that should be present in the account balance or class of transactions
C. often stated as 50-75% of materiality level
D. the level of audit risk the auditor is willing to accept
E. both A and C
F. both B and E
Question 17
1. To obtain the likely misstatements for the account balance or class of transactions, auditors
divide the known misstatement by the likely misstatement
subtract the likely misstatement from the known misstatement
add the known misstatement to the likely misstatement
subtract the known misstatement from the likely misstatement
subtract the known misstatement from the projected misstatement
Question 18
1. Variables sampling is used to determine the accuracy of the recorded amount in the population from the evidence in a sample of the population.
True
False
