Sampling

Question 0

Incorrect acceptance

Incorrect rejection

Answer 0

Incorrect acceptance = effectiveness of audit

Incorrect rejection = efficiency of audit

→both when variable sampling used for substantive procedure

Question 1

Sampling risk

Answer 1

A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest

Question 2

Fixed sample size for test of control

Answer 2

Dollar unit
PPS
Variables

Question 3

Sample size

Answer 3

Inverse relationship with tolerable rate

In determining sample size, auditor should consider likely rate of deviations, allowable risk of assessing list too low, & tolerable deviation rate

Question 4

Statical sampling in test of control

Answer 4

Deviations from specific internal control procedures at given rate ordinarily result in misstatement at a lower rate

Question 5

Classical variable sampling

Answer 5

• Auditor needs to estimate the dollar amount of standard deviation of the population
• Inclusion of zero and negative balances generally does not require special design considerations

Question 6

Discovery sampling

Answer 6

A sampling plan for locating at least 1 deviation, providing that the deviation occurs in the population with a specified frequency

Question 7

PPS sampling

Answer 7

Tolerable misstatement/reliability factor for overstatement=interval
Recorded amount/interval=sample size