A3 Flashcards
What is Variable sampling?
used to estimate numerical measurement of a population (ex. dollar value of inventory)
What is the primary objective of Probability proportional to sample size?
To Id overstament errors
Define Precision
Evaluating possible error in either direction
What type of sampling is used to determine the inventory quantities on hand?
Variable sampling
What is an advantage of Stratified vs Nonstratified Sampling?
Stratified helps auditor measure sufficiency of the audit (quantify the audit risk)
What is a procedure that is performed to audit the statement of cashflows?
Auditor reconciles the amounts on the statement to amounts on other financial statements.
Why might the auditor incorrectly assess control risk higher than appropriate? (2 ways)
- if the deviation rate in the auditors sample is higher than the tolerable rate
- If the deviation rate in population is less than tolerable rate
What risk increases when auditor performs substantive analytical audit procedures at interim date?
Detection risk
Define detection risk?
Risk that an auditor will not detect material misstatement that exists in an assertion
What is the result if detection risk decreases?
Substantive tests increase
