Question 1

When testing internal controls,which of the following statements is not true with respect to the use of nonstatistical sampling?

Accepted Answer

A)   Nonstatistical sampling is permitted in the audits of both public and nonpublic entities.
B)   Nonstatistical sampling does not require the use of random selection techniques.
C)   When using nonstatistical sampling, auditors are required to quantify the parameters used to determine sample size.
D)   Auditors are required to use professional judgment in evaluating the sample results in a nonstatistical sampling application.E) None of the above
F) B) and C)

Question 2

Which of the following would not be an example of nonsampling risk in an attributes sampling application?

Accepted Answer

A)   Failure to perform the appropriate type of test of controls procedure
B)   Failure to notice a deviation from prescribed control procedures
C)   Incorrectly estimating the expected population deviation rate
D)   Incorrectly accumulating the number of deviationsE) C) and D)
F) B) and C)

Question 3

In the study of internal control,the auditor uses sampling to compare the ____ to the _____.

Accepted Answer

A)   error; overall materiality level
B)   sampling risk; precision
C)   deviation rate; tolerable rate of deviation
D)   precision interval; upper limit on misstatementE) C) and D)
F) A) and B)

Question 4

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the

Accepted Answer

A)   sample rate of deviation plus the allowance for sampling risk equals the tolerable rate of deviation.
B)   sample rate of deviation is less than the expected rate of deviation used in planning the sample.
C)   tolerable rate less the allowance for sampling risk exceeds the sample rate of deviation.
D)   sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation.E) None of the above
F) A) and B)

Question 5

Which of the following statements is true when selecting a sample of invoices from a population to perform tests of controls?

Accepted Answer

A)   The audit team should select a few more items than needed to replace any cases in which an invoice is missing or destroyed.
B)   If the audit team wishes to use statistical sampling, either block or haphazard selection is appropriate.
C)   Computerized audit techniques can be used to define the population but not to select sample items.
D)   The audit team's goal in selecting a sample is to increase the likelihood that it is representative of the population.E) A) and B)
F) None of the above

Question 6

The ultimate purpose of control risk assessment is to

Accepted Answer

A)   estimate the overall risk of failing to detect material misstatements.
B)   decide the nature, timing, and extent of further audit procedures.
C)   determine the risk of incorrect acceptance.
D)   determine the probability that errors entered the accounts.E) A) and B)
F) A) and C)

Question 7

As a result of sampling procedures applied as tests of controls,an auditor incorrectly assesses control risk lower than appropriate.The most likely explanation for this situation is that

Accepted Answer

A)   the deviation rates of both the auditor's sample and the population exceed the tolerable rate of deviation.
B)   the deviation rates of both the auditor's sample and the population are less than the tolerable rate of deviation.
C)   the deviation rate in the auditor's sample is less than the tolerable rate of deviation, but the deviation rate in the population exceeds the tolerable rate of deviation.
D)   the deviation rate in the auditor's sample exceeds the tolerable rate of deviation, but the deviation rate in the population is less than the tolerable rate of deviation.E) A) and C)
F) C) and D)

Question 8

Using the appropriate sampling tables,identify the missing data for each of the following independent attributes sampling applications.

Accepted Answer

1.3; 2.12.5%; 3.7.5%...

Question 9

Indicate how each of the following conditions affect the upper limit rate of deviation by using the letters I (increase),D (decrease),or N (no effect).For each condition,hold all other factors constant.
____ 1.An increase in the tolerable rate of deviation from 2% to 5%.
____ 2.A decrease in the number of deviations from 5 to 1.
____ 3.An increase in the risk of underreliance from 5% to 10%.
____ 4.A decrease in the risk of overreliance from 10% to 5%.
____ 5.An increase in the sample rate of deviation from 2.3% to 3.5%.

Accepted Answer

1.N; 2.D; ...

Question 10

If an auditor calculated an upper limit rate of deviation of 5% when the tolerable rate of deviation was 4%,the auditor would conclude that

Accepted Answer

A)   the population deviation rate is low enough to rely on internal control as planned.
B)   the population deviation rate may be higher than that necessary to rely on internal control as planned.
C)   the control risk can be assessed at planned levels.
D)   the control risk should be assessed at lower levels.E) A) and B)
F) B) and C)

Question 11

In each of the following situations,indicate whether a fixed (F),sequential (S),or discovery (D)attributes sampling plan is being used.
____ 1.The audit team has determined the tolerable rate of deviation to be 5%,the risk of overreliance to be 10%,and the expected population deviation rate to be zero.
____ 2.Based on the risk of overreliance,expected population deviation rate and tolerable rate of deviation,the audit team examined a sample of 50 items before determining if additional items should be included in the sample.
____ 3.Using the AICPA Sample Size tables,the audit team determined the appropriate sample size and selected the sample items.However,the audit team stopped the examination after a deviation was found.
____ 4.The audit team established the risk of overreliance to be 5%,the tolerable rate of deviation to be 4%,and the expected population deviation rate to be 3%.Using the AICPA Sample Size tables,the audit team decided to sample over 1,000 items.
____ 5.The audit team is performing a sampling application to evaluate the operating effectiveness of an entity's internal controls.The application used could provide a more efficient method of examination,but it is important that the audit team evaluate the sample in the order they were selected.

Accepted Answer

1.D; 2.S; ...

Question 12

As a result of tests of controls,an auditor assessed control risk too low and decreased the effectiveness of her substantive procedures.This assessment occurred because the true deviation rate in the population was

Accepted Answer

A)   less than the risk of overreliance, based on the auditor's sample.
B)   less than the deviation rate in the auditor's sample.
C)   greater than the risk of overreliance, based on the auditor's sample.
D)   greater than the deviation rate in the auditor's sample.E) A) and B)
F) None of the above

Question 13

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

Accepted Answer

A)   increase inherent risk.
B)   increase overall materiality levels.
C)   decrease substantive procedures.
D)   decrease detection risk.E) A) and B)
F) None of the above

Question 14

Based on relationships among these factors,identify the missing data for each of the following independent attributes sampling applications.

Accepted Answer

1.4; 2.4.5...

Question 15

An auditor's determination of a lower level of control risk would most likely be associated with

Accepted Answer

A)   larger population sizes for tests of controls.
B)   larger samples for substantive procedures.
C)   smaller samples for substantive procedures.
D)   lower levels of detection risk.E) B) and C)
F) A) and C)

Question 16

Judgments about the frequency of control deviations that identify a particular control risk level are related to

Accepted Answer

A)   sample rate of deviation.
B)   tolerable rate of deviation.
C)   upper limit rate of deviation.
D)   expected population deviation rate.E) B) and D)
F) All of the above

Question 17

Which of the following is the audit team's primary objective in selecting an attributes sampling selection method?

Accepted Answer

A)   To provide a high probability of selecting at least one item containing a deviation
B)   To select a sample that is representative of the population from which it is drawn
C)   To select controls applied to larger dollar transactions for examination
D)   To select controls applied to transactions that are more likely to contain deviationsE) A) and D)
F) A) and C)

Question 18

Which of the following deviations would probably be of most concern to auditors?

Accepted Answer

A)   A deviation resulting from an employee's unintentional error
B)   A deviation that represents an isolated and nonrecurring mistake
C)   A deviation that represents an employee's careless attention to duties
D)   A deviation that has no implications with regard to the effectiveness of other controlsE) A) and D)
F) B) and D)

Question 19

Which of the following is not true with respect to the use of nonstatistical sampling?

Accepted Answer

A)   The use of nonstatistical sampling generally results in a smaller sample size.
B)   The use of nonstatistical sampling is permissible under generally accepted auditing standards.
C)   Auditors may use block and haphazard selection methods when using nonstatistical sampling.
D)   The use of nonstatistical sampling does not permit the auditor to control exposure to the risk of overreliance.E) A) and B)
F) A) and C)

Question 20

Lincoln,CPA,selected a sample of 100 items by dividing the population of 100,000 sales invoices by 100.With a random start,she then selected every 1,000th invoice.This selection process is referred to as

Accepted Answer

A)   unrestricted random selection.
B)   nonstatistical selection.
C)   systematic random selection.
D)   judgmental selection.E) All of the above
F) A) and C)

Exam 18: Attributes Sampling

In the study of internal control,the auditor uses sampling to compare the to the _.

Correct Answer
verified

Which of the following statements is true when selecting a sample of invoices from a population to perform tests of controls?

Correct Answer
verified

Correct Answer
verified
1.D; 2.S; ...
View Answer

When testing internal controls,which of the following statements is not true with respect to the use of nonstatistical sampling?

Correct Answer
verified

Judgments about the frequency of control deviations that identify a particular control risk level are related to

Correct Answer
verified

If an auditor calculated an upper limit rate of deviation of 5% when the tolerable rate of deviation was 4%,the auditor would conclude that

Correct Answer
verified

An auditor's determination of a lower level of control risk would most likely be associated with

Correct Answer
verified

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the

Correct Answer
verified

Correct Answer
verified
1.N; 2.D; ...
View Answer

The ultimate purpose of control risk assessment is to

Correct Answer
verified

Which of the following is the audit team's primary objective in selecting an attributes sampling selection method?

Correct Answer
verified

As a result of sampling procedures applied as tests of controls,an auditor incorrectly assesses control risk lower than appropriate.The most likely explanation for this situation is that

Correct Answer
verified

Lincoln,CPA,selected a sample of 100 items by dividing the population of 100,000 sales invoices by 100.With a random start,she then selected every 1,000^th invoice.This selection process is referred to as

Correct Answer
verified

Using the appropriate sampling tables,identify the missing data for each of the following independent attributes sampling applications.

Correct Answer
verified
1.3; 2.12.5%; 3.7.5%...
View Answer

Based on relationships among these factors,identify the missing data for each of the following independent attributes sampling applications.

Correct Answer
verified
1.4; 2.4.5...
View Answer

As a result of tests of controls,an auditor assessed control risk too low and decreased the effectiveness of her substantive procedures.This assessment occurred because the true deviation rate in the population was

Correct Answer
verified

Which of the following would not be an example of nonsampling risk in an attributes sampling application?

Correct Answer
verified

Which of the following is not true with respect to the use of nonstatistical sampling?

Correct Answer
verified

Which of the following deviations would probably be of most concern to auditors?

Correct Answer
verified

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

Correct Answer
verified

Exam 18: Attributes Sampling

In the study of internal control,the auditor uses sampling to compare the ____ to the _____.

Correct AnswerverifiedShow Answer

Which of the following statements is true when selecting a sample of invoices from a population to perform tests of controls?

Correct AnswerverifiedShow Answer

Correct Answerverified1.D; 2.S; ...View AnswerShow Answer

When testing internal controls,which of the following statements is not true with respect to the use of nonstatistical sampling?

Correct AnswerverifiedShow Answer

Judgments about the frequency of control deviations that identify a particular control risk level are related to

Correct AnswerverifiedShow Answer

If an auditor calculated an upper limit rate of deviation of 5% when the tolerable rate of deviation was 4%,the auditor would conclude that

Correct AnswerverifiedShow Answer

An auditor's determination of a lower level of control risk would most likely be associated with

Correct AnswerverifiedShow Answer

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the

Correct AnswerverifiedShow Answer

Correct Answerverified1.N; 2.D; ...View AnswerShow Answer

The ultimate purpose of control risk assessment is to

Correct AnswerverifiedShow Answer

Which of the following is the audit team's primary objective in selecting an attributes sampling selection method?

Correct AnswerverifiedShow Answer

As a result of sampling procedures applied as tests of controls,an auditor incorrectly assesses control risk lower than appropriate.The most likely explanation for this situation is that

Correct AnswerverifiedShow Answer

Lincoln,CPA,selected a sample of 100 items by dividing the population of 100,000 sales invoices by 100.With a random start,she then selected every 1,000th invoice.This selection process is referred to as

Correct AnswerverifiedShow Answer

Using the appropriate sampling tables,identify the missing data for each of the following independent attributes sampling applications.

Correct Answerverified1.3; 2.12.5%; 3.7.5%...View AnswerShow Answer

Based on relationships among these factors,identify the missing data for each of the following independent attributes sampling applications.

Correct Answerverified1.4; 2.4.5...View AnswerShow Answer

As a result of tests of controls,an auditor assessed control risk too low and decreased the effectiveness of her substantive procedures.This assessment occurred because the true deviation rate in the population was

Correct AnswerverifiedShow Answer

Which of the following would not be an example of nonsampling risk in an attributes sampling application?

Correct AnswerverifiedShow Answer

Which of the following is not true with respect to the use of nonstatistical sampling?

Correct AnswerverifiedShow Answer

Which of the following deviations would probably be of most concern to auditors?

Correct AnswerverifiedShow Answer

On the basis of attributes sampling,an auditor decided to increase the assessed level of control risk from the level originally planned.To achieve an overall audit risk level that is substantially the same as the original planned level of audit risk,the auditor would

Correct AnswerverifiedShow Answer

In the study of internal control,the auditor uses sampling to compare the to the _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1.D; 2.S; ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
1.N; 2.D; ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Lincoln,CPA,selected a sample of 100 items by dividing the population of 100,000 sales invoices by 100.With a random start,she then selected every 1,000^th invoice.This selection process is referred to as

Correct Answer
verified

Correct Answer
verified
1.3; 2.12.5%; 3.7.5%...
View Answer

Correct Answer
verified
1.4; 2.4.5...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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