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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
Q

Sampling Approaches: Determine the sampling described - Presence or absence of an attribute

A

Attribute Sampling

26
Q

Sampling Approaches: Attribute sampling answers the question of?

A

How many

27
Q

Sampling Approaches: Attribute sampling expresses conclusions in

A

Rates of incidence

28
Q

Sampling Approaches: Determine the sampling described - employed when auditor believes that relatively few errors will be found in a population

A

Stop-Go sampling

29
Q

Sampling Approaches: In stop or go sampling, audit tests can be stop at the latest moment (T or F)

A

False. Earliest possible moment

30
Q

Sampling Approaches: Determine the sampling described - Used when the objective is to find fraud

A

Discovery sampling

31
Q

Sampling Approaches: In discovery sampling, what are the conclusions depending on whether an error is found, or when no error is found

A

No error: there is no fraud in the population
There is error: the whole sample is fraudulent

32
Q

Sampling Approaches: Determine the sampling described - deals with population characteristics that vary

A

Variable sampling

33
Q

Sampling Approaches: variable sampling provides conclusions based on?

A

Deviations from the norm

34
Q

Sampling Approaches: Variable sampling is also known as?

A

Dollar estimation or mean estimation sampling

35
Q

Sampling Approaches: Determine the sampling described - takes a sample from divided and various groups

A

Stratified mean per unit

36
Q

Sampling Approaches: Determine the sampling described - sample mean is calculated and projected as an estimated total

A

unstratified mean per unit

37
Q

Sampling Approaches: why is stratified mean per unit used?

A

to produce a smaller overall sample size relative to unstratified mean per unit

38
Q

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

A

Difference estimation

39
Q

Sampling Approaches: What is the formual for mean per unit

A

(Audited Value/Sample Size) x Population Size

40
Q

Sampling Approaches: What is the formula for difference estimation

A

Book Value + (Difference of A and B Value/ Sample Size) x Population Size

41
Q

Sampling Terms: a percentage expression of the probability that the characteristics of the sample are a true representation of the population

A

Confidence Coefficient

42
Q

Sampling Terms: What is the correlation between Confidence coefficient and Sample size

A

The greater the confidence coefficient, the larger the sample size.

43
Q

Sampling Terms: If internal controls are strong what can the auditor do to the cc

A

you can lower it

44
Q

Sampling Terms:

A
45
Q

Sampling Terms: — Equal to one minus the confidence coefficient

A

Level of risk

46
Q

Sampling Terms: Set by an IS auditor, it represents the acceptable
range difference between
the sample and the actual
population

A

Precision

47
Q

Sampling Terms: What is the relationship of precision and sample size

A

Inverse. The higher the precision amount, the smaller the sample size

48
Q

Sampling Terms: An estimate stated
as a percent of the
errors that may exist

A

Expected error rate

49
Q

Sampling Terms: Relationship of expected error rate and sample size

A

The higher the expected error rate the larger the sample size. To determine the actual amount of error in the population

50
Q

Sampling Terms: relationship of sample size and standard deviation

A

The greater the standard deviation, the larger the sample size

51
Q

Sampling Terms: Describes the
maximum
misstatement or
number of errors that
can exist without an
account being
materially misstated

A

Tolerable error rate

52
Q

Sampling Terms: Tolerable error rate is used for the ___ __ ___ of the precision range for compliance testing

A

planned upper limit

53
Q

Sampling Terms: Precision range and
precision have the
same meaning when
used in compliance
testing (t or f)

A

False. Substantive testing

54
Q

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

A

sampling risk

55
Q

Sampling Risk: a material weakness is assessed as likely when in fact the population is not materially misstated

A

Risk of Incorrect Rejection

56
Q

Sampling Risk: Risk of incorrect rejection is also called? and uses what type of symbol

A

Type 1 error or false positive

57
Q

Sampling Risk: Risk of incorrect rejection compromises

A

efficiency

58
Q

Sampling Risk: a material weakness is assessed as unlikely when in fact the population is materially misstated

A

Risk of incorrect acceptance

59
Q

Sampling Risk: Risk of incorrect acceptance is also called and uses what symbol

A

Type II error or false negative. The beta symbol

60
Q

Sampling Risk: Risk of Incorrect acceptance compromises what?

A

effectiveness

ITABP (10 decks)

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