A5 - Audit Sampling

Question 1

What are the two types of sampling?

Answer 1

Attribute sampling (tests internal controls and can usually be answered with a yes/no response)
Variable/PPS sampling (substantive tests usually answered with a dollar amount)

Question 2

In statistical sampling methods used in substantive testing, when would an auditor most likely stratify a population into meaningful groups?

Answer 2

When the population has highly variable recorded amounts

Question 3

T/F: Erroneously concluding that an account balance is materially misstated is an example of incorrect rejection

Answer 3

True

Question 4

What is the primary objective of probability proportional to sample size?

Answer 4

To identify overstatement errors

Question 5

When the risk of assessing control risk too low is revised to a lower percentage, what will happen to the sample size?

Answer 5

It will increase because the risk the auditor is willing to bear is decreasing

Question 6

If there is an increase in the tolerable misstatement amount, what will happen to the sample size?

Answer 6

It will decrease

Question 7

Under probability-proportional-to-size (PPS) sampling, how is the sampling interval calculated?

Answer 7

Tolerable misstatement/reliability factor (from table)

Question 8

Under probability-proportional-to-size (PPS) sampling, how is the sample size calculated?

Answer 8

Recorded amount of the population/sampling interval