Question 1

In assessing sampling risk,the risk of incorrect rejection and the risk of assessing control risk too high relate to the:

Accepted Answer

A)  Efficiency of the audit.
B)  Effectiveness of the audit.
C)  Selection of the sample.
D)  Audit quality controls.E) All of the above
F) None of the above A

Question 2

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

Accepted Answer

A)  Projected misstatement.
B)  Sampling error.
C)  Standard error.
D)  Nonsampling error.E) A) and C)
F) C) and D)

Question 3

The 2000 accounts receivable of ABC Company have a total book value of $40,000.Bob Rotter,CPA,has selected and audited a sample of 100 accounts with a total book value of $1,950.The audited value of the 100 accounts in the sample is $1,875. Using the ratio estimation technique,Rotter's estimate (to the nearest dollar) of year-end accounts receivable balance would be:

Accepted Answer

A)  $37,500
B)  $38,462
C)  $38,500
D)  $41,600E) None of the above
F) C) and D)

Question 4

The 3000 accounts receivable of DEF Company have a total book value of $60,000.Bob Smith,CPA,has selected and audited a sample of 100 accounts with a total book value of $2,100.Using the difference estimation technique,Smith has properly estimated a projected misstatement of an overstatement of $6,000 for the entire population.The audited value of Smith's sample is:

Accepted Answer

A)  $1,700
B)  $1,800
C)  $1,900
D)  $2,300E) A) and D)
F) A) and C)

Question 5

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Accepted Answer

A)  Depend primarily on appropriate segregation of duties.
B)  Are carefully reduced to writing and are included in client accounting manuals.
C)  Leave an audit trail in the form of evidence of compliance.
D)  Enable the detection of material fraud in the accounting records.E) None of the above
F) All of the above

Question 6

If all other factors specified in an attributes sampling plan remain constant,decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

Accepted Answer

A)  Increase.
B)  Remain the same.
C)  Decrease.
D)  Indeterminate, depends upon exact change being made.E) A) and B)
F) A) and C)

Question 7

Which of the following statistical sampling techniques involves taking samples in a series of stages?

Accepted Answer

A)  Systematic sampling.
B)  Sequential sampling.
C)  Continuous sampling.
D)  Multiple location sampling.E) A) and B)
F) A) and C)

Question 8

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

Accepted Answer

A)  Evaluate the results as if the sample size had been 19.
B)  Treat the missing check as a deviation for the purpose of evaluating the sample.
C)  Treat the missing check in the same manner as the majority of the other 19 checks, i.e., countersigned or not.
D)  Choose another check to replace the missing check in the sample.E) None of the above
F) B) and C)

Question 9

Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control?

Accepted Answer

A)  Number of items in the population.
B)  Total dollar amount of the items to be sampled.
C)  Acceptable level of risk of assessing control risk too low.
D)  Tolerable misstatement.E) A) and D)
F) B) and D) C

Question 10

The auditors expect a population deviation rate of billing errors of eight percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Accepted Answer

A)  Attributes sampling.
B)  Stratified random sampling.
C)  Variables sampling.
D)  None, as sampling does not seem appropriate in this situation.E) B) and D)
F) None of the above

Question 11

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the difference estimation technique,estimated total audited value of the population is:

Accepted Answer

A)  $100,000.
B)  $120,000.
C)  $140,000.
D)  $144,000E) None of the above
F) A) and B)

Question 12

An auditor wishes to estimate inventory shrinkage by weighing a sample of inventory items.From experience,the auditor knows that a few specific items are subject to unusually large amounts of shrinkage.In using statistical sampling,the auditor's best course of action is to:

Accepted Answer

A)  Eliminate any of the items known to be subject to unusually large amounts of shrinkage.
B)  Increase the sample size to lessen the effect of the items subject to unusually large amounts of shrinkage.
C)  Stratify the inventory population so that items subject to unusually large amounts of shrinkage are reviewed separately.
D)  Continue to draw new samples until a sample is drawn which includes none of the items known to be subject to large amounts of shrinkage.E) A) and D)
F) C) and D)

Question 13

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique,the estimated total audited value of the population is:

Accepted Answer

A)  $100,000.
B)  $120,000.
C)  $140,000.
D)  $144,000E) A) and B)
F) None of the above D

Question 14

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Accepted Answer

A)  Lower assessment of control risk.
B)  Greater reliance on analytical procedures.
C)  Smaller expected frequency of misstatements.
D)  Smaller measure of tolerable misstatement.E) B) and C)
F) C) and D)

Question 15

The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a:

Accepted Answer

A)  Statistical error.
B)  Sampling misstatement.
C)  Standard error of the mean.
D)  Nonsampling error.E) None of the above
F) C) and D)

Question 16

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.This situation illustrates the risk of:

Accepted Answer

A)  Incorrect acceptance.
B)  Incorrect rejection.
C)  Assessing control risk too high.
D)  Assessing control risk too low.E) All of the above
F) C) and D)

Question 17

The auditors expect a population deviation rate of billing errors of two percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Accepted Answer

A)  Attributes sampling.
B)  Stratified sequential sampling.
C)  Discovery sampling.
D)  None, as sampling does not seem appropriate in this situation.E) A) and D)
F) A) and B)

Question 18

Which of the following is not generally used for selecting samples?

Accepted Answer

A)  Random number tables.
B)  Random number generators.
C)  Physical representation numbers.
D)  Systematic selection.E) A) and D)
F) A) and C)

Question 19

Using mean-per-unit estimation,an auditor has taken a sample of 200 from a population's 40,000 items; that population has a book value of $200,000.She found that in her sample the average audited value was $4.20,while the average book value was $5.20.What is the estimated total audited value of the population?

Accepted Answer

A)  $160,000.
B)  $161,538.
C)  $168,000.
D)  $200,000.E) A) and B)
F) A) and C)

Question 20

When the auditors have decided to use statistical rather than nonstatistical sampling,a disadvantage is that:

Accepted Answer

A)  Designing efficient samples is more difficult.
B)  The costs of training staff may be higher.
C)  Sampling without replacement must be used.
D)  Objectively evaluating results is impossible.E) A) and D)
F) B) and D)

Exam 9: Audit Sampling

In assessing sampling risk,the risk of incorrect rejection and the risk of assessing control risk too high relate to the:

Correct Answer
verified
A

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

Correct Answer
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Correct Answer
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Correct Answer
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Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Correct Answer
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If all other factors specified in an attributes sampling plan remain constant,decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

Correct Answer
verified

Which of the following statistical sampling techniques involves taking samples in a series of stages?

Correct Answer
verified

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

Correct Answer
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Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control?

Correct Answer
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C

The auditors expect a population deviation rate of billing errors of eight percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Correct Answer
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The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the difference estimation technique,estimated total audited value of the population is:

Correct Answer
verified

An auditor wishes to estimate inventory shrinkage by weighing a sample of inventory items.From experience,the auditor knows that a few specific items are subject to unusually large amounts of shrinkage.In using statistical sampling,the auditor's best course of action is to:

Correct Answer
verified

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique,the estimated total audited value of the population is:

Correct Answer
verified
D

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Correct Answer
verified

The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a:

Correct Answer
verified

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.This situation illustrates the risk of:

Correct Answer
verified

The auditors expect a population deviation rate of billing errors of two percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Correct Answer
verified

Which of the following is not generally used for selecting samples?

Correct Answer
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Correct Answer
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When the auditors have decided to use statistical rather than nonstatistical sampling,a disadvantage is that:

Correct Answer
verified

Exam 9: Audit Sampling

In assessing sampling risk,the risk of incorrect rejection and the risk of assessing control risk too high relate to the:

Correct AnswerverifiedA

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Correct AnswerverifiedShow Answer

If all other factors specified in an attributes sampling plan remain constant,decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

Correct AnswerverifiedShow Answer

Which of the following statistical sampling techniques involves taking samples in a series of stages?

Correct AnswerverifiedShow Answer

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

Correct AnswerverifiedShow Answer

Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control?

Correct AnswerverifiedC

The auditors expect a population deviation rate of billing errors of eight percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Correct AnswerverifiedShow Answer

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the difference estimation technique,estimated total audited value of the population is:

Correct AnswerverifiedShow Answer

An auditor wishes to estimate inventory shrinkage by weighing a sample of inventory items.From experience,the auditor knows that a few specific items are subject to unusually large amounts of shrinkage.In using statistical sampling,the auditor's best course of action is to:

Correct AnswerverifiedShow Answer

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique,the estimated total audited value of the population is:

Correct AnswerverifiedD

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Correct AnswerverifiedShow Answer

The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a:

Correct AnswerverifiedShow Answer

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.This situation illustrates the risk of:

Correct AnswerverifiedShow Answer

The auditors expect a population deviation rate of billing errors of two percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Correct AnswerverifiedShow Answer

Which of the following is not generally used for selecting samples?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the auditors have decided to use statistical rather than nonstatistical sampling,a disadvantage is that:

Correct AnswerverifiedShow Answer

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A

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C

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D

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