Chapter 9 [Salosagcol] Flashcards
1
Q
This involves the application of the procedures to less than 100% of the items within an account balance or class of transactions. This enables the auditor to obtain and evaluate audit evidence about some characteristics of the selected items in order to form an opinion about the characteristics of all the items supporting an account balance or transaction class.
a. Audit techniques
b. Audit sampling
c. Selective testing
d. Specific identification
A
b
2
Q
When designing audit procedures, the auditor should determine the appropriate means of selecting items for testing. The means available to the auditor would include:
a. 100% examination, Audit sampling, Selecting specific items
b. Audit sampling
c. Audit sampling, Selecting specific items
d. Selecting specific items
A
a
3
Q
Which of the following constitutes audit sampling?
a. Selecting and examining specific items to determine whether or not a particular procedure is being performed.
b. Examining items to obtain information about matters such as the client’s business, the nature of transactions, accounting and internal control systems.
c. Examining items whose values exceed a certain amount so as to verify a large proportion of the total amount of an account balance or class of transactions.
d. Applying audit procedures to less than 100% of items within an account balance or class of transactions such that all sampling units have a chance of selection.
A
d
4
Q
The auditor’s principal objective when using a sample of tests of details of balances is whether the
a) account balance being audited is fairly stated.
b) transactions being audited are free of misstatements.
c) controls being tested are operating effectively.
d) transactions and account balances being audited are fairly stated.
A
a
5
Q
Audit sampling for substantive tests is appropriate when
a. Analytical procedures are used
b. The auditor wants to eliminate sampling risks
c. A population contains small number of large value items
d. Tests of details are performed
A
d
6
Q
For which fo the following audit procedures is audit sampling inappropriate?
a. Review sales transactions for large and unusual amounts
b. Examine a sample of duplicate sales invoices for credit approval.
c. Compare the quantity on duplicate sales invoices with the quantity on related shipping documents.
d. Audit sampling is appropriate for each of the above procedures.
A
a
7
Q
Audit sampling for test of control is generally appropriate when
a. Control leaves evidence of performance
b. Control leaves no evidence of performance
c. 100% of the transactions is tested
d. Examining specific high value items in the population
A
a
8
Q
The possibility that the auditor’s conclusion based on a sample may be different from the conclusion reached if the entire population were subjected to the same procedure is called
a. Audit risk
b. Non-sampling risk
c. Sampling risk
d. Detection risk
A
c
9
Q
Which of the following best illustrates the concept of sampling risk?
a. A randomly chosen sample may not be representative of the population as a whole on the characteristics of interest.
b. An auditor may select audit procedures that are not appropriate to achieve the specific objective.
c. An auditor may fail to recognize errors in the documents examined for the chosen sample.
d. The documents related to the chosen sample may not be available for inspection.
A
a
10
Q
One of the ways to reduce sampling risk is to
a. Increase the sample size
b. Carefully design the audit procedures to be used
c. Provide proper supervision and instruction of the audit team
d. Use variables sampling rather than attribute sampling
A
a
11
Q
Non-sampling errors can occur when audit tests do not uncover existing exceptions in the
a. Population
b. Planning stage
c. Sample
d. Financial statement
A
c
12
Q
One of the causes of non-sampling error is
a. Failure to draw a random sample
b. Failure to draw a representative sample
c. The use of inappropriate or ineffective audit procedures
d. The use of attributes sampling instead of variables sampling
A
c
13
Q
One of the ways to control non-sampling risk is through
a. Proper supervision and instruction of the client’s employees
b. Proper supervision and instruction of the audit team
c. The use of attributes sampling rather than variables sampling
d. Control which ensure that the sample drawn is random and representative
A
b
14
Q
Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?
a. Sampling risk
b. Nonsampling risk
c. Audit risk
d. Detection risk
A
b
15
Q
One cause of nonsampling risk is
a. Ineffective use of audit procedures
b. Testing less than the entire population
c. Use of extensive tests of controls
d. Any of the above
A
a
16
Q
Sampling risk may be controlled by
a. Increasing the sample size
b. Adequate supervision of audit personnel
c. Both A and B
d. Neither A nor B
A
c
17
Q
Which of the following statements is most correct?
a. A sample of all items of a population will eliminate sampling risk but increase nonsampling risk
b. The use of an appropriate sample selection technique ensures a representative sample
c. The auditor’s failure to recognize an exception is a significant cause of sampling risk
d. The use of inappropriate audit procedures is a significant cause of nonsampling risk.
A
d
18
Q
One of the ways to reduce sampling risk is to
a. Carefully design the audit procedures to be used
b. Use variables sampling rather than attributes sampling
c. Provide proper supervision and instruction of the audit team
d. Use an appropriate method of selecting sample items from the population
A
d
19
Q
In assessing sample risk, alpha risks relate to the
a. Efficiency of the audit
b. Selection of the sample
c. Effectiveness of the audit
d. Audit quality controls
A
a
20
Q
In performing substantive tests, the auditor is concerned with two risks or errors of sampling, the alpha error and the beta error.
a. The alpha error is of greater concern to the auditor than the beta error.
b. The beta error is of greater concern to the auditor than the alpha error
c. The beta error and the alpha error are of equal importance to the auditor
d. Neither the alpha error nor the beta error need be considered by the auditor
A
b
21
Q
To determine if a sample is truly representative of the population, an auditor would be required to
a. Conduct multiple samples of the same population
b. Never use sampling because of the expense involved
c. Audit the entire population
d. Use systematic sample selection
A
c
22
Q
While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. Which of the following is the least likely auditor reaction to this discovery?
a. Perform expanded audit tests in the relevant areas.
b. Increase detection risk in the relevant areas
c. Increase the sample size for test of control
d. Take no action until tests of other audit areas are completed
A
a
23
Q
In assessing sample risk, beta risks relate to the
a. Efficiency of the audit
b. Selection of the sample
c. Effectiveness of the audit
d. Audit quality controls
A
c
24
Q
The acceptable risk of assessing control risk too low will normally be assessed at a ____ level when auditing a public company.
a. Higher
b. Compensating
c. Lower
d. Nominal
A
c
25
What is the proper order of steps for the following activities?
1. Analyze exceptions
2. Select the sample
3. Design audit procedure
4. State the objectives of the audit test
5. Determine the appropriate sample size
a. 1,3,2,4,5
b. 4,3,1,2,5
c. 4,3,5,2,1
d. 1,2,3,4,5
c
26
PSA 530 identifies two general approaches to audit sampling. They are
a. Random & nonrandom
b. Statistical & nonstatistical
c. Precision & reliability
d. Risk and nonrisk
b
27
Which of the following sampling plans would be designed to estimate a numerical measurement of a population such as peso value?
a. Numerical sampling
b. Sampling of attributers
c. Discovery sampling
d. Sampling for variables
d
28
Which of the following statements best expresses the impact that the performance of audit procedures has on statistical and nonstatistical sampling?
a. Audit procedures on the sample item will vary as a result of using either statistical or nonstatistical sampling
b. The audit procedures will be the same for either statistical or nonstatistical sampling but they must be performed differently for each
c. Statistical sampling requires quantitative audit procedures, whereas nonstatistical sampling requires judgmental audit procedures
d. Audit procedures on the sample item will not vary as a result of using either statistical or nonstatistical sampling
d
29
Which of the following statements is true?
a. The audit procedures will vary as a result of using either statistical or nonstatistical sampling
b. The audit procedures will be the same for either statistical or nonstatistical sampling, but they must be performed differently for each.
c. Statistical sampling requires quantitative audit procedures, whereas nonstatistical sampling requires judgmental audit procedures
d. The same audit procedures are performed in the same manner for either statistical or nonstatistical sampling.
d
30
A statistical method used to estimate the proportion of items in a population containing a characteristics of interest is
a. Attributes sampling
b. Variables sampling
c. Estimation sampling
d. Population - proportional-to-size sampling
a
31
Which of the following statement is correct with respect to the quantification of sampling risk?
a. Sampling risk cannot be quantified
b. Sampling risk can only be quantified when nonstatistical sample selection techniques are used to select the sample
c. Sampling risk can be quantified only when statistical sampling techniques are used to select the sample.
d. none of the above
c
32
Which of the following sampling methods would be most appropriate in performing tests of controls over authorization of cash disbursements
a. Attributes
b. Variables
c. Ratio
d. Stratified
a
33
There are many kinds of statistical estimates that an auditor may find useful, but basically every accounting estimate is either of a quantity or of an error rate. The statistical terms that roughly correspond to "quantities" and "error rate," respectively, are:
a. Attributes and variables
b. Variables and attributes
c. Constants and attributes
d. Constants and variables
b
34
Which of the following is not true for nonstatistical sampling?
a. Applies mathematical rules that allows auditors to quantify sampling risk.
b. May use statistical selection techniques.
c. Reaches conclusion about the population on a judgmental sample.
d. Does not allow measurement of sample reliability.
a
35
When the auditor intends to evaluate a sample statistically, the only acceptable selection method is
a. Statistical selection
b. Judgmental selection
c. Haphazard selection
d. Block sample selection
a
36
Which of the following is not a type of statistical method that provides results in peso terms?
a. Variables sampling
b. Attributes sampling
c. Monetary-unit sampling
d. Sampling with probability proportional to size
b
37
Oscar CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%. In auditing client invoices, Oscar should use
a. Stratified sampling
b. Classical sampling
c. Proportional sampling
d. Attributes sampling
d
38
A principal advantage of statistical methods of attributes sampling over nonstatistical methods is that they provide a scientific basis for planning the
a. Risk assessing control risk to low
b. Tolerable exception rate
c. Expected population exception rate
d. Sample size
d
39
Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?
a. Review sales transactions for large and unreasonable amounts.
b. Observe whether the duties of the accounts receivable clerk are separate from handling cash.
c. Examine a sample of duplicate sales invoices for credit approval by the credit manager.
d. Review the aged schedule of accounts receivable to determine if receivables from officers are included.
c
40
Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?
a. Review sales transactions for large and unreasonable amounts.
b. Observe whether the duties of the accounts receivable clerk are separate from handling cash.
c. Examine a sample of duplicate sales invoices for credit approval by the credit manager.
d. Review the aged schedule of accounts receivable to determine if receivables from officers are included.
c
41
Auditors are concerned with which type of exceptions in populations of accounting data when performing test of control?
a. Deviations from client established controls
b. Monetary misstatements in transaction data
c. Monetary misstatements in account balance details
d. Auditors are concerned with all of these exceptions
a
42
An advantage of using statistical sampling is that such techniques
a. Mathematically measure risk
b. Eliminate the need for judgmental decision
c. Define the value of reliability necessary to provide audit assurance
d. Have been established in the courts to be superior to nonstatistical sampling
a
43
Sampling used for tests of details of balances provides results in terms of:
a. Deviation rates
b. Percentages
c. Pesos
d. Expectation rates
c
44
If an auditor, planning to use statistical sampling, is concerned with the number of a client's sales invoices that contain mathematical errors, the auditor would most likely utilize which sampling technique?
a. Random sampling with replacement
b. Sampling for attributes
c. Sampling for variables
d. Stratified random sampling
b
45
In a sampling application, the group of items about which the auditor wants to estimate some characteristic is called the
a. Population
b. Sample
c. Attribute of interest
d. Sampling unit
a
46
Which of the following statements is most correct about the quantification sampling risk?
a. Sampling risk cannot be quantified
b. Sampling risk can be quantified only when non-statistical selection techniques are used to select the sample
c. Sampling risk can be quantified only when statistical selection techniques are used to select the sample
d. None of the above
c
47
The sample deviation rate equals
a. The number of deviations in the population divided by the sample size
b. The number of items in the population multiplied by the number of deviations in the sample
c. The number of deviations in the sample divided by the sample size
d. The number of deviations in the population divided by the population size
c
48
The deviation rate the auditor will permit in the population and still be willing to reduce the assessed level of control risk is called the
a. Tolerable deviation rate
b. Estimated population deviation rate
c. Acceptable sampling risk
d. Sample deviation rate
a
49
Statistical samples do not allow
a. More efficient samples
b. Measurement of samples reliability
c. Replacement of the auditor's professional judgment
d. Measurement of sample risk
c
50
The maximum amount of error in a population that the auditor is willing to accept is referred to as the
a. Acceptable risk
b. Tolerable error
c. Expected error
d. Tolerable materiality
b
## Footnote
The events or transactions that should be considered in financial accounting or the matters of litigations, claims, and assessments are considered as the matters which come within the direct knowledge and control of the management.
51
The deviation rate the auditor expects to find in the population, before testing begins, is called the
a. Tolerable deviation rate
b. Sample deviation rate
c. Computed upper deviation rate
d. Expected deviation rate
d
52
Statistical sampling cannot
a. Determine reliability of samples
b. Select a sample to draw inference about a population
c. Assure a sample will be representative of a population
d. Measure the risk that a sample is not representative population
c
53
Which of the following must be set prior to testing a sample?
a. Sample deviation rate
b. Achieved upper precision limit.
c. Computed upper deviation rate
d. Tolerable deviation rate
d
54
The tolerable rate of deviations for tests of controls is generally:
a. Lower than the expected rate of deviation
b. Higher than the expected rate of deviation
c. Identical to the expected rate of deviation
d. Unrelated to the expected rate of deviation
b
55
Which of the following factors is generally not considered in determining sample size for a test of controls?
a. Population size
b. Tolerable rate
c. Risk of assessing control risk too low
d. Expected population deviation rate
a
56
A principal advantage of statistical methods of attributed sampling over nonstatistical methods is that they provide a scientific basis for establishing the:
a. Risk of assessing control risk too low
b. Tolerable deviation rate
c. Exepected population deviation rate
d. Sample size
d
57
The risk which the auditor is willing to take accepting a control as being effective when it is not is the
a. Finite correction factor
b. Tolerable exception rate
c. Acceptable risk of assessing control risk too low
d. Estimated population exception rate
c
58
If the auditor decides to assess control risk at the maximum level, tests of controls are
a. Increased in number
b. Reduced in number
c. Not performed
d. Unchanged from prior planned settings
c
59
Auditors who prefer statistical over nonstatistical sampling believe that the principal advantage of statistical sampling flows from its unique ability to
a. Provide a mathematical measurement of uncertainty
b. Promote a more legally defensible procedural approach
c. Define the precision required to provide audit satisfaction
d. Have been established in the courts to be superior to judgmental sampling.
a
60
The relationship between sample size and the allowable sampling risk is
a. Direct
b. Inverse
c. Variable
d. Indeterminate
b
61
If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance
a. Is reduced
b. Is increased
c. Is not changed
d. May be reduced or increased depending upon other circumstances
a
62
The tolerable rate of deviation for tests of controls necessary to justify a control risk assessment depends primarily on which of the following?
a. The cause of errors
b. The extent of reliance to be placed on the procedures
c. The amount of any substantive errors
d. The limit used in audits of similar clients
b
63
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
a. Assessing control risk at a low level
b. Greater reliance on analytical procedures
c. Smaller expected frequency of misstatements
d. Smaller measure of tolerable misstatements
d
64
Which of the following does not have to be considered in determining the initial sample size of a test of details?
a. Tolerable error
b. Acceptable risk of incorrect injection
c. Estimate of misstatements in the population
d. Acceptable risk of incorrect aceeptance
b
65
How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details?
a. Increase, Increase
b. Increase, Decrease
c. Decrease, Increase
d. Decrease, Decrease
c
66
The tolerable rate of deviations for tests of controls is generally
a. Lower than the estimated population deviation rate in the related accounting records
b. Higher than the estimated population deviation rate in the related accounting records
c. Identical to the estimated population deviation rate in the related accounting records
d. Unrelated to the estimated population deviation rate in the related accounting records
b
67
Which of the following combinations results in a decrease in sample size for attributes?
Adaptable sampling risk---Tolerable deviation rate---Expected population deviation rate
a. Increase, Decrease, Increase
b. Decrease, Increase, Decrease
c. Increase, Increase, Decrease
d. Increase, Increase, Increase
c
68
Which of the following would have the least impact in determining sample size for tests of controls?
a. Expected population deviation rate
b Risk of assessing control risk too low
c. Tolerable deviation rate
d. Population size
d
69
In determining the sample size for a test of controls, an auditor should consider the expected rate of deviations, the allowable sampling risk, and the
a. Tolerable deviation rate
b. Risk of incorrect acceptance
c. Nature and cause of deviations
d. Population size
a
70
As the amount of misstatements expected in the population increases, the planned sample size will:
a. Decrease
b. Increase
c. Vary based on characteristics of the population
d. Be unaffected
b
71
Which of the following statements is correct concerning statistical sampling in tests of controls?
a. The population size has little or no effect on determining sample size except for very small populations.
b. The expected population deviation rate has little or no effect on determining sample size except for very small populations.
c. As the population size doubles, the sample size also should double.
d. For a given tolerable rate, a larger sample size should be selected as the expected population deviation rate decreases.
a
72
If acceptable audit risk is increase, acceptable risk of incorrect acceptance will
a. Increase
b. Decrease
c. Not be affected
d. Either increase or decrease
a
73
To determine an optimum sample size when sampling methods are used in a substantive tests, all of the following factors must be considered except the
a. Variance in the population
b. risk levels the auditor is willing to accept
c. Deviation rate the auditor expects to find in the population
d. Tolerable misstatement
c
74
Which of the following results in a larger sample size?
a. Decrease the desired confidence level and decrease the tolerable deviation rate
b. Increase in the desired confidence level and decrease the tolerable deviation rate
c. Decrease the desired confidence level and increase the tolerable deviation rate
d. increase the desired confidence level and increase the tolerable deviation rate
b
75
The acceptable risk of assessing control risk too low has a significant effect on sample size. The relationship this acceptable risk and the sample size is
a. Variable
b. Direct
c. Inverse
d. Nonexistent
c
76
The acceptable risk of assessing control risk too low is a measure of the level of risk that
a. The auditor is willing to take
b. Is predicted by the random number table
c. Is predicted by the statistical frequency table
d. Is generated as a result of the auditor's knowledge of the tru population deviation rate
a
77
In attributes sampling, an advance estimate of the estimated population deviation rate is necessary to plan the appropriate sample size. The relationship between the expected population deviation rate and the sample size is
a. Direct
b. Inverse
c. Dependent on other factors present
d. Indeterminate
a
78
Statistical theory proves that in most types of populations to which attributes sampling applies, the population size is
a. Not a consideration in determining sample size
b. A minor consideration in determining sample size
c. A major consideration in determining sample size
d. The determining factor in establishing sample size
b
79
When using statistical sampling, the auditor would probably require a smaller if the
a. Population increases
b. Desired reliability decreases
c. Desired precision interval narrows
d. Expected exception rate increases
b
80
Principal methods of sampling selection include all of the following except
a. Haphazard
b. Random number
c. Systematic
d. Statistical
d
81
A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a
a. Random sample
b. Statistical sample
c. Judgment sample
d. Representative sample
a
82
Correspondence is established between the random number table and the population by
a. Identifying each item in the population with a unique number
b. Deciding the number of digits to use in the random number table and their association with the population numbering system
c. Defining which digits the auditor uses in a column and the method of reading the table
d. Selecting a random starting point on the table
b
83
When auditors wish to evaluate a sample statistically, an acceptable selection method is:
a. Systematic sample selection
b. Judgmental selection
c. Haphazard selection
d. Block sample selecton
a
84
Which of the following statements regarding block sampling is least likely to be true?
a. Block sampling is the section of several items in sequence.
b. It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used
c. Only one block should be selected to increase the probability of a representative sample
d. Once the first item in the block is selected, the remainder of the block is chosen automatically.
b
85
The process which requires the calculation of an interval and then selects the items based on the size of the interval is
a. Statistical sampling
b. Systematic selection
c. Random selection
d. Computerized selection
b
86
In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the:
a. Sampling interval
b. Tolerable deviation rate
c. Computed upper deviations rate
d. Mean
a
87
The advantage of systematic sample selection is the
a. It is easy to use
b. There is limited possibility of it being biased
c. It is unnecessary to determine if the population is arranged randomly.
d. It automatically selects items material to the financial statements.
a
88
A mean of reducing the potential bias in systematic sample selection is to
a. Use multiple starts
b. Use a random number table
c. Include a large block of the population
d. Include only the high-dollar value items
a
89
When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, is called
a. Block sample selection
b. Haphazard selection
c. Systematic sample selection
d. Statistical selection
b
90
In examining cash disbursements, an auditor plans to choose a sample using systematic selection with a random start. The primary advantage of such a systematic selection is that population items
a. That include irregularities will not be overlooked when the auditor exercises compatible reciprocal options
b. May occur in a systematic pattern, thus making the sample more representative
c. May occur more than once in a sample
d. Do not have to be prenumbered in order for the auditor to use the technique
d
91
A sample in which the characteristics of the sample are the same as those of the population is a(n)
a. Variables sample
b. Representative sample
c. Attributes sample
d. Random sample
b
92
A method of sampling in which all the items in the population are divided into two or more sub-population is
a. Variable sampling
b. Stratified sampling
c. Attribute sampling
d. Divisible sampling
b
93
In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if
a. Value-weighted sampling is used
b. The population has highly variable recorded amounts
c. The auditor's estimated tolerable misstatement is extremely small
d. The standard deviation of recorded amounts is relatively small
b
94
What is the primary objective of using stratification as a sampling method in auditing?
a. To increase the confidence level at which a decision will be reached from the results of the sample selected.
b. To determine the occurrence rate for a given characteristic in the population being studied.
c. To decrease the effect of variance in the total population
d. To determine the precision range of the sample selcted
c
95
Which of the following can be used when using random number selection?
a. Use of random number tables
b. Use computer generated random numbers
c. Either A or B
d. Neither A nor B
c
96
Which of the following statistical selection techniques is least desirable for use by an auditor?
a. Systematic selection
b. Block selection
c. Stratified selection
d. Sequential selection
b
97
In performing a review of his client's cash disbursements, a CPA uses systematic sample selection with a random start. The primary disadvantage of systematic sample selection is that population items
a. May occur twice in the sample
b. Must be recorded in a systematic pattern before the sample can be drawn
c. may occur in a systematic pattern, thus negating the randomness of the sample
d. Must be replaced in the population after sampling to permit value statistical inference
c
98
An auditor is testing internal control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher
a. Constitutes a deviation
b. Cannot be located
c. Has been properly voided
d. Represents an immaterial peso amount
c
99
An auditor plans to examine a sample of 20 purchase orders for proper approvals as prescribed by the client's control procedures. One of the purchase orders in chosen sample of 20 cannot be found, and the auditor is unable to use alternative procedures to test whether that purchase order was properly approved. The auditor should
a. Choose another purchase order to replace the missing purchase order in the sample
b. Consider this test of control invalid and proceed with substantive tests since internal control cannot be relied upon
c. Treat the missing purchase order as a deviation for the purpose of evaluating the sample
d. Select a completely new set of 20 purchase orders
c
100
What is an auditor's evaluation of a statistical sample for attributes when a test of 100 documents results in 4 deviations if tolerable rate is 5%, the expected population deviation rate is 3%, and the allowance for sampling risk is 2%?
a. Accept the sample results as support for planned reliance on the control because the tolerable rate less the allowance for sampling risk equals the expected population deviation rate
b. Modify planned reliance on the control because the sample deviation plus the allowance for sampling risk exceeds the tolerable rate
c. Modify planned reliance on the control because the tolerable rate plus the allowance for sampling risk exceeds the expected population deviation rate
d. Accept the sample results as support for planned reliance on the control because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate
b
101
If the auditor is concerned that a population may contain exceptions, the determination of a sample size sufficient to include at least one such exception is a characteristics of
a. Discovery sampling
b. Random sampling
c. Variables sampling
d. Peso-unit sampling
a
102
Which of the following statistical sampling plan does not use a fixed sample size for tests of control?
a. PPS sampling
b. Value-weighted sampling
c. Sequential sampling
d. Variables sampling
c
103
You are testing controls over accounts receivable and are determining if the appropriate credit authorization was made by an authorized person. Your sample size is 40 and your computed upper deviation rate is 5%. On the first 10 items sampled you have found 8 deviations. You would most likely:
a. Continue with the other 30 items
b. Revisit the sample size calculations
c. Increase the tolerable deviation rate
d. Stop the test and re-set control risk for accounts recevable
d
104
In using audit sampling in performing set of control, the auditor is primarily interested in determining the
a. Computed lower deviation rate
b. Computed upper deviation rate
c. Computed average deviation rate
d. None of the above
b
105
In which sampling method is the probability of selection of an item proportional to the size or the value of the item (e.g., a P1,000 item is 10 times more likely to be selected than a P100 item)?
a. Discovery sampling
b. Value-weighted sampling
c. Ratio estimation
d. Stratified sampling
b
106
Using statistical sampling to assist in verifying the year-end accounts payable balance, an auditor has accumulated the following data:
*Refer to page 427, problem 106*
Using the ratio estimation technique, the auditor's estimate of year-end accounts payable balance would be
a. P6,150,000
b. P5,125,000
c. P6,000,000
d. P5,050,000
c
107
An auditor uses monetary unit sampling with a sampling interval of P20,000 and detects an item with a recorded amount of P10,000 with an audited value of P4,000. The projected misstatement of the sample is
a. P12,000
b. P6,000
c. P10,000
d. P3,000
a
108
Value weighted sampling is most appropriate when the auditor
a. Anticipates understatement errors
b. Expects no errors
c. Anticipates overstatement errors
d. Has assessed control risk at high level
c
109
The use of the ratio estimation sampling technique is most effective when
a. The calculated audit amounts are approximately proportional to the client's book amounts
b. A relatively small number of differences exist in the population
c. Estimating populations whose records consist of quantities, but not book values
d. Large overstatement differences and large understatement differences exist in the population
a
110
In comparison with classical variables sampling, which of the following is an advantage of value weighted sampling?
a. Value weighted sampling automatically results in a stratified sample
b. Value weighted sampling results in a smaller sample size if many differences are expected between audited and recorded amounts
c. Value weighted sampling is particularly appropriate when understatement errors are expected
d. Value weighted sampling is less likely to overstate the allowance for sampling risk when errors are found in the sample
a
111
Value weighted sampling is not particularly effective at detecting
a. Overstatements
b. Understatements
c. Errors in current assets
d. Errors in noncurrent assets
b
112
When using monetary unit sampling, the recorded peso value of the population is a definition of all the items in the
a. Population
b. Population which the auditor has included in the sample
c. Population which contain errors
d. Sample which contain errors
a
113
When errors are found in a sample, auditors in practice generally make the assumption
a. That the errors found in the sample are only an isolated event
b. That the sample errors are the same as the population errors
c. That the population errors are smaller than the sample errors
d. That the actual sample errors are representative of the population errors
d
114
The final step in the evaluation of audit results is the decision to
a. Accept the population as fairly stated or to require further action
b. Determine sampling error and calculate the estimated total population error
c. Project the point estimate
d. Determine the error in each sample
a
115
The error assumption to make regarding the overall percent of error in those population items containing error is
a. Determined using random number tables
b. Set after a quantitative analysis of client's internal control system
c. Based on the auditor's personal judgement in the circumstances
d. Based on statistical analysis using confidence limits
c
116
When the computed upper deviation rate is greater than the tolerable deviation rate, it is necessary for the auditor to take specific action. Which of the following courses of action would be inappropriate?
a. Revise and relax the tolerable deviation rate
b. Expand the sample size
c. Revise the assessed control risk
d. Modify the planned substantive tests
a
117
Which of the following statements is correct with respect to the evaluation of sample units?
a. It is acceptable to make nonstatistical evaluations only when probabilistic sample selection is used
b. It is acceptable to make nonstatistical evaluations only if the auditor cannot quantify sampling risk
c. It is never acceptable to evaluate a nonprobabilistic sample as if it were a statistical one
d. All of the above
c
118
Which of the following statement is a valid criticism of the use of non-statistical sampling methods?
a. Many audit tests, such as footing of journals, must be performed outside a statistical sampling context
b. The cos of performing random selection or testing often exceeds the benefits
c. Non-statistical sampling does not differ substantially from statistical sampling methods
d. Conclusions may be drawn in more precise ways when using statistical sampling methods
d
119
The highest estimated deviation rate in the population at a given acceptable risk of assessing control risk too low is
a. The sample deviation rate
b. Estimated population deviation rate
c. The computed upper deviation rate
d. The tolerable exception rate
c
120
If an auditor, without statistical sampling, selects a sample of one hundred items from a population and finds two exceptions, the auditor
a. Can conclude that the sample exception rate is 2%
b. Can conclude that the population deviation rate is 2%
c. Can calculate the highest deviation rate expected in the population
d. Cannot make any conclusions about either sample or the population
a
121
Before the population can be considered acceptable based on the acceptable risk of assessing control risk too low, the computed upper deviation rate must be
a. Greater than or equal to the tolerable deviation rate
b. Greater than the tolerable deviation rate
c. Less than or equal to the tolerable deviation rate
d. Less than the tolerable deviation rate
c
122
An error that arises from an isolated event that has not recurred other than on specifically identifiable occasions and is therefore not representative or errors in the population
a. Tolerable error
b. Non-sampling error
c. Sampling error
d. Anomalous error
d
