Auditing5

Question 1

What are the sampling risks in substantive testing?

Answer 1

Risk of Incorrect Acceptance

Risk of Incorrect Rejection

Question 2

What are the sampling risks in tests of controls?

Answer 2

Risk of assessing control risk too low

Risk of assessing control risk too high

Question 3

What is the difference between an Attribute sample and a Variables sample?

Answer 3

Attribute sampling is primarily used for testing internal controls.
Variables sampling and PPS sampling are typically used in substantive testing of account balances.

Question 4

For Contingencies: What is required for the following assessments?
Probable
Reasonably possible
Remote

Answer 4

Probable = Accrue and disclose. If loss not estimated, only disclose.
Reasonably possible = Disclose
Remote = May ignore or may disclose