ch 9 Flashcards
Which of the following courses of action would an auditor most likely follow in planning a sample for accounts receivable confirmation if the auditor is aware of several unusually large accounts?
Stratify the population by dollar amount.
In confirming a clients accounts receivable in prior years, an auditor found many differences between recorded account balances and confirmation replies. These differences, which turned out not to be errors, required substantial work and time to resolve. This year, the auditor might change the sampling unit for accounts receivable from entire account balances to
Individual invoices
An auditor is trying to determine the sample size for an inventory observation using classical variables (difference) estimation. To calculate required sample size, the auditor usually has to take into account:
A. Variability in the dollar amount of inventory
B. Tolerable error
The risk of incorrect rejection and the likelihood of assessing control risk too high relate to
Efficiency in samplng
An auditor may decide to decrease the risk of incorrect acceptance when
Increased reliability from the sample is desired.
Given random selection, the same sample size, and the same precision requirement for the testing of two unequal populations, the risk of incorrect acceptance on the smaller population is
Lower than the risk of incorrect acceptance for the larger population
The auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance. This is an example of which of the following types of sampling risk?
Incorrect acceptance
Using statistical sampling to assist in verifying the year-end accounts receivable balance, and auditor has accumulated the following data:
Population: 4,100 accounts Book balance: $5,000,000 Balance determined by the auditor: ?
Sample: 200 accounts Sample book balance: $150,000 Sample balance determined by the auditor: $140,000
Using difference estimation, the auditor’s estimate of year-end accounts receivable is:
$4,795,000
Which of the following characteristics most likely would be an advantage of using monetary-unit sampling (MUS) rather than classical difference estimation for errors?
The sample will result in a smaller sample size if few errors are expected.
Which of the following statements is correct concerning monetary-unit sampling (MUS)?
Overstated units have a higher probability of sample selection than units that are understated.
Which of the following sampling methods would be used to estimate a numeric measurement of a population, such as a dollar value?
variable sampling
A number of factors influence the sample size for a substantive test of details of an account balance. All other factors being equal, which of the following would lead to a larger sample size?
smaller amount of tolerable misstatement
The risk of incorrect acceptance relates to the:
effectiveness of the audit.
Which of the following statements concerning monetary-unit sampling is correct?
The auditor controls the risk of incorrect acceptance by specifying the desired confidence level for the sampling plan.
An auditor is performing substantive procedures of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past experience indicates that there may be numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate?
classical variables sampling
