Audit Sampling PSA 530 (Test of Controls) 9. The process of dividing a population into subpopulations, each of which is a group of sampling units which have similar characteristics (often monetary value) is A. Division B. Stratification C. Grouping D. Characterization
32.. Which of the following combinations results in a decrease in sample size in a sample for attributes? Risk of assessing Tolerable rate Expected population control risk too low deviation rate A. Increase Decrease Increase B. Decrease Increase Decrease C. Increase Increase Decrease D. Increase Increase Increase
39 of the following constitutes audit sampling? a. Selecting and examining specific items to determine whether or not a particular procedure is being performed. b. Examining items to obtain information about matters such as the client's business, the nature of transactions, accounting and internal control systems. c. Examining items whose values exceed a certain amount so as to verify a large proportion of the total amount of an account balance or class of transactions. d. Applying audit procedures to less than 100% of items within an account balance or class of transactions such that all sampling units have a chance of selection.
a. Nonstatistical sampling b. Attribute estimation sampling c. Discovery sampling d. Stratified random sampling
d. Choose another check to replace the missing check in the sample.
a. The auditor studies the business and industry and applies analytical procedures as a basis for assessing inherent risk. b. When control risk and inherent risk are high, the auditor increases detection risk to maintain overall audit risk at the desired level. c. The auditor studies and evaluates internal control policies and procedures for assessing control risk. d. The auditor designs substantive audit procedures to reduce detection risk to an acceptable level.
b. Nonstatistical sampling has greater applicability to large populations than does statistical sampling. c. Nonstatistical sampling is more subjective, but produces greater consistency in the application of audit judgment. d. Nonstatistical sampling has greater applicability to populations that lend themselves to random selection.
b. Does not allow sampling risk to be objectively measured. c. Frequently results in samples that are not representative of the population. d. Gives less accurate point estimates of parameters than statistical sampling. 10 8. B 31. An auditor is testing credit authorization procedures by examining sales invoices for credit approval by the credit department. The procedures will be considered to be working adequately if 96% of all sales invoices either indicate approval or are cash sales. The auditor selects a random sample of 100 invoices. In this situation, which of the following outcomes illustrates underassessment? a. The auditor finds five deviations and concludes that procedures work inadequately. The actual population deviation rate is 2%. b. The auditor finds no deviations and concludes that procedures work adequately. The true population deviation rate is 5%. c. The auditor finds no deviations and concludes that the procedures work adequately. The true population deviation rate is 2%. d. The auditor finds five deviations and concludes that procedures work inadequately. The true population deviation rate is 6%.
b. Variable sampling. c. Discovery sampling. d. Attribute sampling.
11 8. An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the a. Sample occurrence rate is less than the expected occurrence rate used in planning the sample. b. Tolerable rate less the allowance for sampling risk exceeds the sample occurrence rate. c. Sample occurrence rate plus the allowance for sampling risk exceeds the tolerable rate. d. Sample occurrence rate plus the allowance for sampling risk equals the tolerable rate.
B. Risk of assessing control risk too low. C. Number of deviations in the population. D. Number of deviations found in the sample. 134. When the auditors have decided to use statistical rather than nonstatistical sampling, a disadvantage is that: 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.
D. The risk of incorrect rejection.
Which of the following factors does an auditor generally most need to consider in planning a particular audit sample for a test of controls?. 38 To determine the number of items to be selected for a particular sample for a test of controls, the auditor should consider the tolerable rate of deviation from the controls being tested, the likely rate of deviations, and the allowable risk of assessing control risk too low.
What are the factors to be considered in designing an audit sample?Sample Design, Size and Selection of Items for Testing.. Performing Audit Procedures.. Nature and Cause of Deviations and Misstatements.. Projecting Misstatements.. Evaluating Results of Audit Sampling.. Which factor below is the most important for the auditor to consider?Which factor below is the most important for the auditor to consider? Audit objective.
What factors should be considered by an auditor before audit of a company?Here are some factors to be considered before choosing an auditor for your business and these factors can protect you from poor experiences.. Price for the services. ... . Reputation in the Industry. ... . Relationship with the Auditor. ... . Experience and certifications. ... . Technical knowledge. ... . Procedures for Quality Assurance. ... . Why CDA?. |