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Audit & Assurance > Module E - Attributes of Sampling > Flashcards

Module E - Attributes of Sampling Flashcards

1
Q

when is sampling used?

A

When the need for exact info is less important and the number of items comprising the population is large

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2
Q

sampling risk is…

A

the likelihood that the decision based on the sample differs from the decision if the overall population was looked at

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3
Q

sampling risk is caused by selecting a…

A

non-representative sample

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4
Q

sampling risk can be controlled by…

A
  1. determining an appropriate sample size
  2. ensuring all items have an equal likelihood of selection
  3. evaluating sample results to control risk
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5
Q

easiest way to get a representative sample is to…

A

randomly select

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6
Q

non sampling risk is the likelihood that that…

A

an incorrect conclusion is drawn for reasons unrelated to the sample

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7
Q

most common cause of non sampling risk is…

A

mistakes in evaluation sample items (misinterpreting data)

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8
Q

attribute sampling is used to..

A

estimate the extent to which a characteristic exists within a population (deviation)

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9
Q

attributes testing is used the the auditor’s…

A

study of internal control

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10
Q

upper limit rate fo deviation is…

A

estimate of the rate at which the client’s internal control is failing to function effectively

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11
Q

process of attributes sampling

A
  1. estimate upper limit rate of deviation
  2. compare to an allowable (tolerable) level
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12
Q

steps in sampling: planning

A
  1. determine the objective
  2. define the deviation condition
  3. define the populations
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13
Q

three factors affecting sample size

A
  1. risk of over reliance
  2. tolerable rate of deviation
  3. expected population deviation rate
  4. population size
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14
Q

sampling risk is established based on…

A

desired level of control risk

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15
Q

lower control risk = ____ risk of over reliance

A

lower

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16
Q

tolerable rate of deviation is based on…

A

desired level of control risk

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17
Q

lower control risk = ____ tolerable rate of deviation

A

lower

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18
Q

expected population deviation rate is estimated based on…

A

past audits

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19
Q

risk of under reliance is a ____ loss

A

efficiency

20
Q

risk of over reliance is a ____ loss

A

effectiveness

21
Q

risk of overreliance is the risk of…

A

asses control risk too low (relying on controls when you shouldn’t be)

22
Q

risk of over reliance occurs when…

A

sample indicates controls are running effectively but they actually are not

23
Q

effective loss means…

A

do not reduce audit risk to a sufficient level

24
Q

risk of over reliance could result in…

A

difference of opinion

25
Q

risk of under reliance means…

A

not relying on controls when you should be

26
Q

risk of under reliance has us do ____ audit work than we need to

A

more

27
Q

does risk of undereliance change audit opinion?

A

NO

28
Q

risk of undue reliance Is the risk of…

A

assessing control risk too high

29
Q

risk of under reliance occurs when..

A

sample indicates controls are not functioning properly but they actually are

30
Q

an efficient loss is…

A

performing more effective substantial procedures than necessary

31
Q

unrestricted random selection is..

A

selecting items based on random numbers matched with a population

32
Q

systematic random selection is…

A

bypass a fixed number of items in the population, selecting each nth item

33
Q

block selection…

A

select contiguous units

34
Q

haphazard selection…

A

selects in a nonsystematic manner

35
Q

with statistical sampling, you can only use…

A

unrestricted random selection or systematic random selection

36
Q

sample rate of deviation =

A

number of deviations / sample size

37
Q

1 - risk of overeliance is the…

A

probability that the true rate of deviation is less than or equal to the URLD

38
Q

risk of over reliance is the…

A

probability that the true rate of deviation exceeds the URLD

39
Q

URLD consists of…

A
  1. sample rate of deviation
  2. allowance for sampling risk
40
Q

if URLD is less than or equal to TRD,

A

rely on controls as planned

41
Q

if URLD is greater than or equal to TRD,

A

reduce planned reliance on controls

42
Q

advantage of sequential sampling is that…

A

the sample may be more efficient than a fixed sampling plan

43
Q

discovery sampling is used when…

A

deviations occur at a very low rate, but are critical in nature

44
Q

with discovery sample, if one deviation is identified…

A

the audit team concludes that control is not operating effectively

45
Q

statistical sampling allows audit team to…

A

control exposure to sampling risk

Audit & Assurance (12 decks)

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