Auditing Exam 3

Which of the following sampling methods would be used to estimate a numeric measurement of a population, such as a dollar value?

• Random Sampling

• Variable Sampling

• Attribute Sampling

• Numeric Sampling

A number of 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?

• smaller amount of tolerable misstatement

• smaller expected frequency of misstatements

• greater reliance on analytical procedures

• greater reliance on internal controls

Considering each independently, a change in which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

Expected Misstatement & Tolerable Misstatement

• No & Yes

• Yes & Yes

• No & No

• Yes & No

The risk of incorrect acceptance relates to the:

• Efficiency of the audit

• Effectiveness of the audit

• allowable risk of tolerable misstatement.

• planning materiality.

Which of the following statements concerning monetary-unit sampling is correct?

• The auditor controls the risk of incorrect acceptance by specifying the desired confidence level for the sampling plan.

• The sampling distribution should approximate the normal distribution.

• Overstated units have a lower probability of sample selection than units that are understated.

• The sampling interval is calculated by dividing the number of physical units, such as the number of invoices, in the population by the sample size.

How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details?

 Increase in Tolerable Misstatement & Increase in Assessed Level of Control Risk

• Increase sample size & Decrease sample size

• Increase sample size & Increase sample size

• Decrease sample size & Decrease sample size

• Decrease sample size & Increase sample size

An auditor is performing substantive procedures of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past experience indicates that there may be numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate?

• classical variables sampling

• monetary-unit sampling

• attribute sampling

• stop-n-go sampling

Which of the following statements concerning the auditor’s use of statistical sampling is correct?

• An assumption of monetary-unit sampling is that the underlying accounting population is normally distributed.

• The selection of zero balances usually does not require special sample design considerations when using monetary-unit sampling.

• A classical variables sample needs to be designed with special considerations to include negative balances in the sample.

• An auditor needs to estimate the dollar amount of the standard deviation of the population in order to use classical variables sampling.

In classical variables sampling, which of the following must be known in order to estimate the appropriate sample size required to meet the auditor’s needs in a given situation?

• the estimated percentage of deviations in the population

• the qualitative aspects of misstatements

• the acceptable level of risk

• the total dollar amount of the population

Which of the following would most likely be an advantage in using classical variables sampling rather than monetary-unit sampling?

• Any amount that is individually significant is automatically identified and selected.

• The auditor rarely needs the assistance of a computer program to design an efficient sample.

• An estimate of the standard deviation of the population’s recorded amounts is not required.

• Inclusion of zero and negative balances generally does not require special design considerations.