Chapter 9

Question 1

Allowance for Sampling Risk (ASR)

Answer 1

Also referred to as precision, an interval around the sample mean in which the true population characteristic is expected to lie

Question 2

Attributes Sampling

Answer 2

A sampling plan enabling the auditors to estimate the rate of deviation (occurrence) in a population

Question 3

Confidence Level

Answer 3

In attributes sampling, the complement of the risk of assessing control risk too low. In variables sampling, the complement of the risk of incorrect acceptance and thus if the risk of assessing control risk too low is .05, the confidence interval is .95

Question 4

Deviation Rate

Answer 4

A defined rate of departure from prescribed controls also referred to as occurrence rate or exception rate

Question 5

Difference estimation

Answer 5

A sampling plan that uses the difference between the audited (correct) values and book values of items in a sample to calculate the estimated total audited value of the population

Question 6

Discovery Sampling

Answer 6

A sampling plan for locating at least 1 deviation, providing that the deviation occurs in the population with a specified frequency

Question 7

Dual-purpose test

Answer 7

A test designed to test a control and to substantiate the dollar amount of an account using the sample

Question 8

Expected population deviation rate

Answer 8

an advance estimate of a deviation rate, is necessary for determining the required sample size in an attributes sampling plan

Question 9

Mean

Answer 9

the average item value computed by dividing total value by the number of items composing total value

Question 10

mean-per-unit estimation

Answer 10

a classical variables sampling plan enabling the auditors to estimate the average dollar value of items in a population by determining the average value of items in a sample

Question 11

nonsampling risk

Answer 11

the aspects of audit risk not due to sampling, normally relates to human error

Question 12

physical representation of the population

Answer 12

the population from which the auditors sample

Question 13

population

Answer 13

the entire field of items from which a sample might be drawn

Question 14

probability-proportional-to-size (PPS) sampling

Answer 14

a variables estimation procedure that uses attributes theory to express a conclusion in monetary dollar amounts

Question 15

projected misstatement

Answer 15

2an estimate of the most likely amount of monetary misstatement in a population

Question 16

random selection

Answer 16

selecting items from a population in a manner in which every item has an equal chance of being included in the sample

Question 17

ratio estimation

Answer 17

a sampling plan that uses the ratio of audited values to book values of items in the sample to calc the estimated total audited value of the population

Question 18

reliability

Answer 18

the complement of the risk of incorrect acceptance

Question 19

representative sample

Answer 19

a sample possessing essentially the same characteristics as the population from which it was draw

Question 20

risk of assessing control risk too high

Answer 20

this risk is the possibility that the assessed level of control risk based on the sample is greater than the true operating effectiveness of the control

Question 21

risk of assessing control risk too low

Answer 21

the most important risk is the possibility that the assessed level or control risk based on the sample is less than the true operating effectiveness of the controls

Question 22

risk of incorrect acceptance

Answer 22

the risk that sample results will indicate that a population is not materially misstated when it is

Question 23

risk of incorrect rejection

Answer 23

the risk that sample results will indicate that a population is materially misstated when it is not

Question 24

sampling error

Answer 24

the difference between the actual rate or amount in the population and that of the sample

Question 25

sampling risk

Answer 25

the risk that the auditors’ conclusion based on a sample might be different from the conclusion they would reach if the test were applied to the entire population

Question 26

sequential sampling

Answer 26

a sampling plan in which the sample is selected in stages with the need for each subsequent stage being conditional on the results of the previous

Question 27

standard deviation

Answer 27

a measure of variability or dispersion of item values within a population

Question 28

stratification

Answer 28

dividing a population into two or more relatively homogeneous subgroups, increases the efficiency of most sampling plans by reducing the variability of items in each stratum, smaller sample sizes

Question 29

systematic selection

Answer 29

the technique of selecting a sample by drawing every nth item in the population following one or more random starting points

Question 30

tolerable deviation rate

Answer 30

the maximum population rate of deviations from a prescribed control that the auditor will tolerate without modifying the planned assessment of control risk

Question 31

tolerable misstatement

Answer 31

an estimate of materiality for the particular audit test

Question 32

variables sampling

Answer 32

sampling plans designed to estimate a numerical measurement of a population such as a dollar value

Question 33

voucher

Answer 33

a document authorizing a cash disbursement