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ITABP > Module 7: Sampling Methodology > Flashcards

Module 7: Sampling Methodology Flashcards

1
Q

Compliance vs Substantive Testing: Audit procedure to evaluate the effectiveness of controls in preventing material weaknesses

A

Compliance testing

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2
Q

Compliance vs Substantive Testing: What does compliance testing determine

A

If controls are applied in the manner that aligns with MANAGEMENT policies and procedure

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3
Q

Compliance vs Substantive Testing: What is usually used as evidence in compliance testing?

A

Audit/Document trails or automated evidence

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4
Q

Compliance vs Substantive Testing: What are the two categories of substantive testing?

A

Test of details and analytical procedures

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5
Q

Compliance vs Substantive Testing: audit procedure to detect material weakness

A

Substantive testing

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6
Q

Compliance vs Substantive Testing: At what level does substantive testing operate at?

A

Assertion level

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7
Q

Compliance vs Substantive Testing: Substantive testing provides evidence of what?

A

Integrity and Validity of the balances in the FS

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8
Q

Compliance vs Substantive Testing: performance of a complex
calculation (e.g., interest) on a sample of accounts or a sample of transactions to vouch for supporting
documentation

A

Substantive

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9
Q

Compliance vs Substantive Testing:

A
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10
Q

Compliance vs Substantive Testing: user access
rights, program change control procedures, documentation procedures, program documentation,
follow-up of exceptions, review of logs and software license audits.

A

Compliance testing

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11
Q

Compliance vs Substantive Testing: An indirect correlation exists between the level of internal controls and the amount of substantive testing
required (T or F)

A

False. Direct

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12
Q

performed when time and cost considerations preclude a total
verification of all transactions or events in a predefined population

A

Sampling

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13
Q

Sampling Approaches: What are the two approaches?

A

Statistical and nonstatistical

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14
Q

Sampling Approaches: Nonstatistical sampling is also called?

A

Judgemental Sampling

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15
Q

Sampling Approaches: Stat sampling uses math to do what?

A
  1. Calculate Sample Size
  2. Select Sample Items
  3. Evaluate the sample results
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16
Q

Sampling Approaches: Nonstatistical sampling uses what to determine the method of sampling?

A

Audit judgment

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17
Q

Sampling Approaches: Why is nonstatistical sampling used?

A

To subjectively choose wich iterms are the most material and risky

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18
Q

Sampling Approaches: Whether stat or nonstat sampling is used the main objective of the sampling is to?

A

get ample and relevant audit evidence

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19
Q

Sampling Approaches: Both methods of sampling are subject to ____ because ____

A

sampling risk; because IS auditor use their judgement in defining characteristics

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20
Q

Sampling Approaches: to use statistical sampling, each item in the population must?

A

have an equal opportunity to be selected

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21
Q

Sampling Approaches: Compliance testing usually employs? While substantive testing usually employs?

A

Compliance: Attribute Sampling
Substantive: Variable Sampling

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22
Q

Sampling Approaches: Attribute Sampling has three related types of sampling which are?

A
  1. Stop-Go Sampling
  2. Discovery Sampling
  3. Attribute Sampling
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23
Q

Sampling Approaches: Substantive Testing has 3 related types of sampling called?

A
  1. Stratified Mean per Unit
  2. Unstratified Mean per Unit
  3. Difference Estimation
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24
Q

Sampling Approaches: Attribute sampling is also called?

A

Fixed sample size sampling or frequency estimating sampling

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25
Sampling Approaches: Determine the sampling described - Presence or absence of an attribute
Attribute Sampling
26
Sampling Approaches: Attribute sampling answers the question of?
How many
27
Sampling Approaches: Attribute sampling expresses conclusions in
Rates of incidence
28
Sampling Approaches: Determine the sampling described - employed when auditor believes that relatively few errors will be found in a population
Stop-Go sampling
29
Sampling Approaches: In stop or go sampling, audit tests can be stop at the latest moment (T or F)
False. Earliest possible moment
30
Sampling Approaches: Determine the sampling described - Used when the objective is to find fraud
Discovery sampling
31
Sampling Approaches: In discovery sampling, what are the conclusions depending on whether an error is found, or when no error is found
No error: there is no fraud in the population There is error: the whole sample is fraudulent
32
Sampling Approaches: Determine the sampling described - deals with population characteristics that vary
Variable sampling
33
Sampling Approaches: variable sampling provides conclusions based on?
Deviations from the norm
34
Sampling Approaches: Variable sampling is also known as?
Dollar estimation or mean estimation sampling
35
Sampling Approaches: Determine the sampling described - takes a sample from divided and various groups
Stratified mean per unit
36
Sampling Approaches: Determine the sampling described - sample mean is calculated and projected as an estimated total
unstratified mean per unit
37
Sampling Approaches: why is stratified mean per unit used?
to produce a smaller overall sample size relative to unstratified mean per unit
38
Sampling Approaches: Determine the sampling described - A statistical model used to estimate the total difference between audited values and book (unaudited) values based on differences obtained from sample observations
Difference estimation
39
Sampling Approaches: What is the formual for mean per unit
(Audited Value/Sample Size) x Population Size
40
Sampling Approaches: What is the formula for difference estimation
Book Value + (Difference of A and B Value/ Sample Size) x Population Size
41
Sampling Terms: a percentage expression of the probability that the characteristics of the sample are a true representation of the population
Confidence Coefficient
42
Sampling Terms: What is the correlation between Confidence coefficient and Sample size
The greater the confidence coefficient, the larger the sample size.
43
Sampling Terms: If internal controls are strong what can the auditor do to the cc
you can lower it
44
Sampling Terms:
45
Sampling Terms: — Equal to one minus the confidence coefficient
Level of risk
46
Sampling Terms: Set by an IS auditor, it represents the acceptable range difference between the sample and the actual population
Precision
47
Sampling Terms: What is the relationship of precision and sample size
Inverse. The higher the precision amount, the smaller the sample size
48
Sampling Terms: An estimate stated as a percent of the errors that may exist
Expected error rate
49
Sampling Terms: Relationship of expected error rate and sample size
The higher the expected error rate the larger the sample size. To determine the actual amount of error in the population
50
Sampling Terms: relationship of sample size and standard deviation
The greater the standard deviation, the larger the sample size
51
Sampling Terms: Describes the maximum misstatement or number of errors that can exist without an account being materially misstated
Tolerable error rate
52
Sampling Terms: Tolerable error rate is used for the ___ __ ___ of the precision range for compliance testing
planned upper limit
53
Sampling Terms: Precision range and precision have the same meaning when used in compliance testing (t or f)
False. Substantive testing
54
arises from the possibility that an IS auditor’s conclusion may be different from the conclusion that would be reached if the entire population were subjected to the same audit procedure
sampling risk
55
Sampling Risk: a material weakness is assessed as likely when in fact the population is not materially misstated
Risk of Incorrect Rejection
56
Sampling Risk: Risk of incorrect rejection is also called? and uses what type of symbol
Type 1 error or false positive
57
Sampling Risk: Risk of incorrect rejection compromises
efficiency
58
Sampling Risk: a material weakness is assessed as unlikely when in fact the population is materially misstated
Risk of incorrect acceptance
59
Sampling Risk: Risk of incorrect acceptance is also called and uses what symbol
Type II error or false negative. The beta symbol
60
Sampling Risk: Risk of Incorrect acceptance compromises what?
effectiveness

ITABP (10 decks)

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