CA Inter Audit Lec 33 & 34 (SA 530)

530.6

Which of the following factors is (are) considered in determining the sample size for tests of control?

• a)       Projected error

• b)       Tolerable error

• c)       Expected error

• d) Both (b) and (c)

530.4

The main advantage of using statistical sampling techniques is that such techniques:

• a)       Mathematically measure risk

• b)       Eliminate the need for judgmental sampling

• c)       Defines the values of tolerable error

• d) All of them

530.7

Which of the following is more scientific:

• a)       Statistical

• b)       Non- statistical

• c)       both (a) and (b)

• d) none of the above

530.12

Statistical sampling has the following characteristics

• a)       Random selection

• b)       Use of Probability theory

• c)       both (a) and (b)

• d) Judgmental approach

530.14

The relationship between tolerable error and sample size is

• a)       Inverse

• b)       Direct

• c)       Close

• d) There is no relationship.

Incs.16.1

         I. Consider the following statements for determining sample size for tests of control: -

Statement I--- An Increase in the tolerable rate of deviation leads to decrease in sample size.

Statement II--- An increase in the expected rate of deviation of the population to be tested leads to increase in sample size.

Statement III—An increase in the number of sampling units in the population leads to substantial increase in sample size.

Which of the following is most likely correct option?

• (a).   All Statements I, II and III are true.

• (b).   Statements I and II are true. However, Statement III is false.

• (c).   Statements I and III are true. However, Statement II is false.

• d). Statements II and III are true. However, Statement I is false.

Incs.16.2

         I.            Consider the following statements for determining sample size for tests of details: -

Statement I--- An increase in tolerable misstatement leads to increase in sample size.

Statement II--- An increase in the auditor’s desired level of assurance that tolerable misstatement is not exceeded by actual misstatement in the population leads to decrease in sample size.

Statement III—An increase in the amount of misstatement auditor expects to find in the population leads to increase in sample size.

Which of the following is most likely correct option?

• (a).   All Statements I, II and III are true.

• (b).   Statements I and II are false. However, Statement III is true.

• (c).   Statements I and III are true. However, Statement II is false.

• d). Statements II and III are true. However, Statement I is false.

Incs.48.1

RRM & Associates have been appointed as the statutory auditors of UVW Ltd. for the FY 2019-2020. The

engagement partner is CA Raj and his engagement team consists of 2 article assistants. CA Raj briefed his audit team regarding the factors affecting the sample selection and the sample size. The team was also told that the tolerable error should be zero and sample size should be selected accordingly. CA Raj gave a detailed audit programme to his team. The audit programme with respect to the checking of accounts receivable and accounts payable consists of checking the accounts on sample basis. CA Raj asked the engagement team to divide the accounts receivables and account payable balances into separate groups and to take sample from each of them.

"Which of the following factors should not be considered by CA Raj in deciding the extent of checking while making the sample plan in case of UVW Ltd.?

• (a).   The size of UVW Ltd.

• (b).  The state of the internal control system of UVW Ltd.

• (c).   The tolerable error range decided in case of UVW Ltd.

• d). The competence of the engagement team.

Incs.48.2

During the course of audit, the audit team noticed that certain internal control system with respect to the accounts receivable were not in place at few instances during the FY 2019-20.

“With respect to the weakness in internal control system of accounts receivable during the FY 2019-20, the audit team:-

• (a).   Should consider a larger sample size or 100% examination of accounts receivables.

• (b).  Should consider a smaller sample size of accounts receivables.

• (c).   Should not consider applying sampling techniques.

• d). Should give a disclaimer of opinion.

Incs.27.2

Mr C and Mr A are thinking about checking the Sales Transactions and Balances of Account Receivables on a Sampling basis and for that they are discussing about which of the main two approaches to sampling would be appropriate in this case. They mostly are satisfied with the Internal Control Procedures as far as Sales Order Processing is concerned.

"Mr C and Mr A are discussing different approaches to Sampling, which are they?

• (a).   Statistical Sampling and Non-statistical Sampling

• (b).  Large Sample and Small Sample

• (c).   Random Sampling and Systematic Sampling

• d). Scientific Sampling and Non-Scientific Sampling