Introduction to audit sampling

Question 1

audit sampling involves the topic of ____and_____

Answer 1

sufficiency and extent

Question 2

definition of audit sampling

Answer 2

the selection and evaluation of less than 100% of the population of audit relevance such that the auditor expects the items selected to be representative of the population.

Question 3

two basic sampling approaches are statistical and nonstatistical sampling. what are the benefits of statistical sampling?

Answer 3

benefits relate primarily to quantifying the sufficiency of audit evidence and still requires judgement but judgements are explicit.

Question 4

attribute sampling is a type of ______sampling. def?

Answer 4

statistical sampling
attribute sampling-test of controls, related to assessment of control risk. testing transactions to assess internal control.

Question 5

variable sampling is a type of ______sampling. def?

Answer 5

statistical sampling
variable sampling-substantive tests to evaluate population’s implied audit value

difference estimation
ratio estimation
mean per unit estimation
probability proportionate to size (pps sampling)

Question 6

sampling risk for test of controls and substantive tests(dollar value)
type 1 error relates to ______
type 2 error relates to ______

Answer 6

efficiency

effectiveness (relates to audit risk)

Question 7

sampling risk

type 1 errors-false rejection(related to efficiency)

Answer 7

test of controls (I/C)-risk of under-reliance on internal control.

substantive ($s)-risk of incorrect rejection of $ balance

Question 8

sampling risk

type 2 errors-false acceptance (related to effectiveness)

Answer 8

I/C-risk of over reliance on internal control

Substantive-risk of incorrect acceptance of $ balance

Question 9

nonsampling risk def

Answer 9

any mistakes made by the auditor other than having a sample that is not representative of the population.

inappropriate audit procedures
failure to recognize the actual characteristics of a sampled item, misinterpreting the results of the sample, etc.