1. Nonsampling risk is the fact that the sample is not representative of the population. True False Question 2 1. Auditing sampling is: the selection of a sample of items from a population so that the auditor expects the sample and evaluation to be representative of the population. the selection and evaluation of a sample of items from an account so that the auditor expects the sample to be representative of the account. the selection and evaluation of a sample of items from a population so that the auditor expects the sample to be representative of the population. the selection and observation of a sample of items from a population so that the auditor expects the sample to be representative of the population. Question 3 1. With nonstatistical sampling, sampling risk is controlled by quantifying sampling risk to keep the risk to an acceptable number quantifying control risk to keep the risk to an acceptable number selecting smaller sample sizes taking a random sample so the sample is representative of the population evaluating sample results to consider control risk in the evaluation of the results Question 4 1. The auditor should consider which of the following factors in selecting the correct sample size? A. More testing will be required for manual controls than automated controls because manual controls are more prone to human error. IT controls that have been tested should continue to be reliable. B. The more transactions in a system, the more items need to be tested. C. The more assurance we receive from other audit procedures, the less the control is tested. D. The less susceptible the control is to management override, the more the control is tested. E. The more frequently a control is performed, the less items are tested. More internal control tests are performed for controls that are performed monthly than for controls performed daily. F. both A and C G. both B and D Question 5 1. A control deviation occurs when the control has been performed but not efficiently there is no indication that the control has been performed the control has been performed but not effectively there is no indication that the control exists Question 6 1. To determine the sample size for tests of controls, the auditor needs to estimate the following information based on his professional judgment the relative rate of deviation for the population to be tested the realizable rate of deviation for the population to be tested the desired level of assurance that the actual rate of deviation is not exceeded by the tolerable rate of deviation the number of sampling units in the population if the population is very small, less than 500 Question 7 1. Systematic random sampling can only be used when internal controls are present the sampling units are prenumbered internal controls are operating random sampling can be used under any circumstances Question 8 1. If the sample deviation rate is lower than the tolerable deviation rate, the auditor will A. reduce the amount of control testing B. assume controls are not working C. assume the controls are working D. reduce the amount of substantive testing E. increase the amount of substantive testing F. both A and C G. both C and D Question 9 1. The auditor uses professional judgment to estimate the risk of underreliance the sample interval the desired control risk the expected deviation rate the actual deviation rate Question 10 1. The auditor uses sampling for substantive tests of balances and for substantive tests of transactions to determine whether the financial statements accounts associated with the account balance or class of transactions are materially misstated whether the financial statements are materially misstated whether the balance sheet accounts associated with the account balance or class of transactions are materially misstated whether the income statement accounts associated with the account balance or class of transactions are materially misstated Question 11 1. The risk of incorrect acceptance of the account balance or class of transactinos is an error that affects the efficiency of the audit the effectiveness of the audit the reliability of the audit the relevance of the audit Question 12 1. The auditor must define the sampling unit in a way that is consistent with the assertion being tested consistent with the account balance being tested consistent with the transaction being tested consistent with the population being tested Question 13 1. Which of the following is a statistical audit sampling technique that the auditor may decide to use? A. judgmental sampling B. haphazard sampling C. monetary unit sampling D. classical variables sampling E. non random number sampling F. both A and C G. both C and D Question 14 1. The auditor makes the decision about whether the misstatements found in a substantive test of balances sample are material after determining if the misstatements are within the tolerance level determining if the misstatements are within the assurance level extrapolating misstatements from the sample to the population projecting misstatements from the sample to the population Question 15 1. With monetary unit sampling each individual interval in the population has an equal chance of being selected each individual dollar in the population has an equal chance of being selected each interval of dollars in the population has an equal chance of being selected each dollar within the interval in the population has an equal chance of being selected Question 16 1. Tolerable misstatement is A. A matter of professional judgment B. amount of misstatement, on the basis of the auditor's professional judgment, that should be present in the account balance or class of transactions C. often stated as 50-75% of materiality level D. the level of audit risk the auditor is willing to accept E. both A and C F. both B and E Question 17 1. To obtain the likely misstatements for the account balance or class of transactions, auditors divide the known misstatement by the likely misstatement subtract the likely misstatement from the known misstatement add the known misstatement to the likely misstatement subtract the known misstatement from the likely misstatement subtract the known misstatement from the projected misstatement Question 18 1. Variables sampling is used to determine the accuracy of the recorded amount in the population from the evidence in a sample of the population. True False  |
