Audit Sampling

Question 1

Attribute Sampling

Answer 1

Primarily used for testing internal controls

Question 2

Variable Sampling& PPS

Answer 2

Sampling used in Substantive testing of account balances

Question 3

Attribute sampling deals with

Answer 3

Characteristics (yes, no?)

Question 4

Variable sampling deals with

Answer 4

Dollar sampling (whats the amount etc?)

Question 5

Audit Risk when it comes to sampling

Answer 5

1) Uncertainties due to sampling

2) uncertainties due to factors other than sampling

Question 6

Sampling Risk

Answer 6

The chance the sample is wrong, leading you to the wrong conclusion

Question 7

A tolerable deviation rate

Answer 7

is a misstatement

Question 8

Risk of Assessing Control Risk

Answer 8

Inverse relationship
want less risk larger sample
accept more risk smaller sample

Question 9

Tolerable Deviation Rate

Answer 9

Inverse Relationship
want less deviation = larger sample
accept more deviation = smaller sample

Question 10

Expected Deviation Rate

Answer 10

Direct Relationship
Expect less deviation = smaller sample
Expect more deviations= larger sample

Question 11

Population size

Answer 11

No relation

Question 12

Upper Deviation Rate

Answer 12

Sample Deviation Rate + Allowance for Sampling Risk

Question 13

Tolerable Misstatement

Answer 13

maximum monetary misstatement in the related account balances or class of transactions that the auditor is willing to accept

Question 14

Variable Sampling Plans

Answer 14

Mean-per-unit estimation
Ratio Estimation
Difference Estimation
Comparison of Methods

Question 15

Attribute Sampling Methods

Answer 15

Discovery Sampling

Stop-or-go Sampling

Question 16

Mean-per-unit Estimation

Answer 16

uses the avg value of the items in the sample to estimate the true population value

Question 17

Ratio Estimation

Answer 17

uses ratio of the audited (correct) values of items to their book values to project the true population value

Question 18

Difference Estimation

Answer 18

uses the average difference between the audited (correct) values of items of their book values to project the actual population value.

Question 19

In a financial statement audit of a nonissuer, a previously communicated significant deficiency that has not been corrected, ordinarily should be communicated again:

Answer 19

In writing, during the current audit.

Question 20

n determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized, an auditor should consider the tolerable rate of deviation from the control activity. The auditor should also consider the:

Answer 20

Likely rate of deviations.

Question 21

During the planning phase of the audit, the auditor obtains an understanding of the internal control system by considering:

Answer 21

The types of misstatements that may occur.

The risk that misstatements may occur.

Factors that influence the design of tests of controls and substantive tests.

The assessment of inherent risk.

Judgments about materiality.

The complexity and sophistication of the entity's operations and systems.

The use of manual vs. computerized control procedures.