Statistical sampling usually may be applied in tests of controls when the clients internal controls

UNIT 6 – Audit Sampling 1.

A sample in which the characteristics in the sample are the same as those of the population is a (an) a. random sample b. variables sample c. attributes sample d. representative sample

2.

Non-sampling errors occur when audit tests do not uncover existing exceptions in the a. population b. sample c. planning stage d. financial statements

3.

One of the causes of non-sampling error a. the use of inappropriate or ineffective audit procedures b. failure to draw a random sample c. failure to draw a representative sample d. the use of attributes sampling instead of variables sampling

4.

One if the ways to eliminate non-sampling risk is through a. proper supervision and instruction of the client’s employees b. proper supervision and instruction of the audit team c. the use of attributes sampling rather than variables sampling d. controls which ensure that the sample drawn is random and representative

5.

Sampling risk (sampling error) is an inherent part of sampling that results from a. inappropriate audit procedures b. failure to recognize exceptions c. testing less than the entire population d. weaknesses in client’s internal control system

6.

One of the ways to reduce sampling risk is to a. use an appropriate method of selecting sample items from the population b. carefully design the audit procedures to be used c. provide proper supervision and instruction of the audit team d. use variables sampling rather than attribute sampling

7.

Which of the following statements is not correct? a. it is acceptable for auditors to use statistical sampling methods b. it is acceptable for auditors to use non-statistical sampling methods c. the primary benefit of statistical sampling methods is the quantification of sampling risk d. an advantage of using statistical sampling is that the cost/benefit ratio is always positive

8.

The most common method used of performing statistical tests of transactions is a. variables sampling b. attribute sampling c. judgment sampling d. random selection of samples

9.

Which of the following statements is a valid criticism of the use of non-statistical sampling methods? a. Many audit tests, such as footing of journals, must be performed outside a statistical content. b. The cost of performing random selection of testing often exceeds the benefits c. Non-statistical sampling does not differ substantially from statistical sampling method. d. Conclusions may be drawn in more precise ways when using statistical sampling methods.

10. Which of the following statements is not correct regarding probabilities and non-probabilistic sample selection? a. In probabilistic selection, every population item has a known chance of being selected. b. Probabilistic selection is required for all statistical sampling methods c. It is not acceptable to make non-statistical evaluations using probabilistic selection d. Both methods are acceptable and commonly used. 11. A sample in which every possible combinations of items in the population has an equal chance of constituting the sample is a a. representative sample b. statistical sample c. random sample d. judgment sample 12. Establishing a route through the random number table a. is an arbitrary decision b. needs to be done in advance of choosing the numbers c. is essential and the route must be allowed consistently d. requires that all three of the above be true 13. Correspondence is established between the random number table and the population by a. identifying each item in the population with a unique number b. deciding the number of digits to use in the random number table and their association with the population numbering system c. defining which digits the auditor uses in a column and the method of reading the table d. selecting a random starting point on the table 14. Numbers drawn from a random number table which are outside the range of the population are a. set aside and used to examine items of the populations with a non-sampling method b. used only if they represent high peso value items c. recycled into the population of random numbers to be used again should they appear a second time d. discarded 15. Which of the following statements is not correct? a. The only reason for selecting a random starting point on a random number table is to eliminate the predictability of the sample. b. It is acceptable to pick a starting point on a random number table by using a “blind stab” method. c. It is impossible to draw a six-digit random number from a table which is separated into columns of five digits. d. When selecting a three-digit number from a table which is separated into columns of five digits, it is permissible to use the first three digits, the middle three digits, or the last three digits. 16. Which of the following statements regarding documentation of the sample selection process is not true?

a. b. c. d.

Regardless of the method used in selecting a random sample, it is necessary to have proper documentation. When comparing statistical sampling to judgmental sampling, it is more important that statistical sampling be properly documented because of its mathematical nature. Minimum documentation would include sufficient information to permit the reproduction of the sample at a later date. For documentation, it is permissible for the auditor to include in the working papers a copy of the table used, with the random numbers identified.

17. Which of the following statements regarding replacement and nonreplacement sampling is not true? a. In replacement sampling, an element in population will not be included in the sample more than once. b. In nonreplacement sampling, an element in the population can be included in the sample only once. c. If the random number corresponding to an element is selected more than once in nonreplacement sampling, it is treated as a discard the second time. d. Auditors rarely use replacement sampling. 18. Which of the following is not an advantage of using computerized selection of random numbers over use of a random number table? a. Time saving b. Reduced likelihood of auditor error c. Automatic documentation d. Correspondence of the numbers with the population is not required 19. The process which requires the calculation of an interval and then selects the items based on the size of the interval is a. Statistical sampling b. Random selection c. Systematic selection d. Computerized selection 20. The advantage of systematic selection is a. It is easy to use. b. There is limited possibility of it being biased. c. It is unnecessary to determine if the population is arranged randomly. d. All three of the above. 21. Which of the following statements regarding block sampling is not true? a. Block sampling is the selection of several items in sequence. b. It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks are used. c. A “reasonable number” for most situations is probably at least six blocks from six different months. d. Once the first item in the block is selected, the remainder of the block is chosen automatically. 22. When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, it is called a. Block selection

b. c. d.

Haphazard selection Systematic selection Statistical selection

23. When the auditor intends to evaluate a sample statistically, the only acceptable selection method is a. Probabilistic selection b. Judgmental selection c. Haphazard selection d. Block selection 24. A statistical method used to estimate the proportion of items in a population containing a characteristic of interest is a. Population proportional to size sampling b. Attributes sampling c. Variables sampling d. Estimation sampling 25. Since auditors are interested in the occurrence of exceptions in populations, they refer to the occurrence rate as a. The exceptions rate b. The populations rate c. The deviation rate d. The confidence level 26. If an auditor, without statistical sampling, selects a sample of one hundred items from a population and finds two exceptions, the auditor a. can conclude that the sample deviation rate is 2% b. can conclude that the population deviation is 2% c. can conclude the highest deviation rate is expected in the population d. cannot make any conclusions about either the sample or the population 27. A one-sided interval specifies a. a CLDR only b. a CUDR only c. both CLDR and CUDR d. neither CLDR nor CUDR 28. While attributes sampling is used primarily for tests of controls, auditors also use it for a. analytical review procedures b. tests of details of balances c. substantive tests of transactions d. all three of the above 29. The risk which the auditor is willing to take of accepting a control as being effective when it is not, is the a. tolerable deviation rate b. acceptable risk of over-reliance c. estimated population deviation rate d. finite correction factor

30. The deviation rate the auditor will permit in the population and still be willing to reduce the assessed level of control risk is called the a. tolerable deviation rate b. estimated population deviation rate c. acceptable risk of over-reliance d. sample deviation rate 31. The deviation rate the auditor expects to find in the population, before testing begins, is called the a. tolerable deviation rate b. sample deviation rate c. computerized upper deviation rate d. none of the above 32. The effect of the finite correction factor on small population sizes is to a. reduce the initial sample size b. increase the initial sample size c. either educe or increase the initial sample size, depending on the circumstances of the situation d. increase the population size 33. Unless a precise statement of what constitutes an attribute is made in advance, the staff person who performs the audit procedure will have no guidelines a. to use when evaluating the results of analytical review procedures b. to determine what documents to obtain and review for the observation tests c. for identifying deviations d. for performing all three of the above 34. Which of the following statements regarding the process of defining the population is not correct? a. The population represents the body of data about which the auditor wishes to generalize. b. The auditor can define the population to include whatever data is desired. c. The auditor can randomly sample from whatever part of the population that he/she chooses. d. The auditor may generalize only about that population which has been sampled. 35. “Whenever a sample is taken, there is a risk that the quantitative conclusions about the population will be incorrect.” a. This is always true. b. This is always true unless 100% of the population is tested. c. This is true for statistical sampling, but not for non-statistical sampling. d. This is true for non-statistical sampling, but not for statistical sampling. 36. The risk of over-reliance on internal control is a measure of the level of risk that a. the auditor is willing to take b. is predicted by the random number table c. is predicted by the statistical frequency table d. is generated as a result of the auditor’s knowledge of the true population deviation rate 37. If the auditor decides to assess control risk at the maximum level, tests of controls are a. not performed b. reduced in number c. increased in number

d.

unchanged from prior planned settings

38. The initial sample size is so called because a. the auditor must take several samples to ensure randomness b. the auditor must take several samples to ensure that the final sample is representative of the population c. the deviations must be evaluated before deciding whether the sample is sufficiently large to achieve the objectives d. there is always another sample to be done 39. Statistical theory proves that in most types of population to which attributes sampling applies, the population size is a. not a consideration in determining the sample size b. a minor consideration in determining n c. a major consideration in determining n d. the determining factor in establishing n 40. The finite correction factor has the effect or significantly changing the sample size only when a. 5% or more of the population is included in the sample b. more than 10% of the population is included in the sample c. greater than 5% but less than 10% of the population is included in the sample d. less than 5% but less than 10% of the population is included in the sample 41. Of the four factors which determine the initial size (population size, tolerable deviation rate, acceptable risk of over-reliance, and expected population deviation rate), a combination of two factors has the greatest effect on sample size. a. Population size times expected population deviation rate b. expected population deviation rate plus acceptable risk of overreliance c. tolerable deviation rate minus expected population deviation rate d. acceptable risk of overreliance minus tolerable deviation rate 42. The sample deviation rate equals a. the number of deviation in the population divided by the sample size b. the number of items in the population multiplied by the number of deviations in the sample c. the number of deviations in the sample divided by the sample size d. the number of deviations in the in the population divided by the population size 43. Which of the following statements is not true? a. Random selection is statistical measurement. b. It is acceptable to use random selection procedures without drawing statistical conclusions. c. It would be in appropriate to a draw a statistical conclusion unless the sample were randomly selected. d. Random selection is a part of statistical sampling. 44. An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the a. sample rate of deviation is less than the expected rate of deviation used in planning the sample b. tolerable rate less than allowance for sampling risk exceeds the sample rate of deviation c. sample rate of deviation plus the allowance of sampling risk exceeds the tolerable rate

d.

sample rate of deviation plus the allowance of sampling risk equals the tolerable rate

45. Which of the following factors is generally not considered in determining “n” for a test of controls? a. Population size b. Tolerable rate c. Risk of assessing control risk too low d. Expected population deviation rate 46. An advantage of using statistical over non-statistical sampling methods in tests of controls is that the statistical methods a. Afford greater assurance than a non-statistical sample of equal size b. Provide an objective basis for quantitatively evaluating sample risks c. Can more easily convert the sample into a dual-purpose test useful for substantive testing d. Eliminate the need to use judgment in determining appropriate sample sizes 47. A principal advantage of statistical methods of attribute sampling over non-statistical methods is that they provide a scientific basis for planning the a. Risk of assessing control risk too low b. Tolerable rate c. Expected population deviation rate d. Sample size 48. The point estimate minus the sampling error An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This tests is performed to satisfy the audit objective of a. accuracy b. completeness c. control d. existence 49. To determine whether the internal control structure operated effectively to minimize errors of failure to invoice a shipment, the auditor would select a sample of transactions from the population represented by the a. customer order file b. bill of lading file c. open invoice file d. sales invoice file 50. In attribute sampling, a 10% change in which if the following factors normally will have the least effect on the size if the statistical sample? a. population size b. tolerable deviation rate c. acceptable risk over reliance d. standard deviation 51. If the result obtained from a particular sample will be critical (that is, the auditor would not be able to render an unqualified opinion unless every in the population were examined), which of the following is the most important to the auditor? a. size of the population

b. c. d.

estimated population deviation rate tolerable deviation rate acceptable risk over reliance

52. Which of the following need to be known to evaluate the results of a sample of a particular attribute? a. deviation rate in the sample b. size of the sample c. acceptable risk over reliance d. deviations in the sample 53. A CPA examining the inventory may appropriately apply sampling for attributes in order to estimate the a. average price of the inventory items b. percentage of slow-moving inventory items c. peso value of inventory d. physical quantity of inventory items 54. If the size of the sample to be used in a particular test of attributes has not been determined by using statistical concepts, but the sample has been chosen in accordance with random selection procedures, a. no inferences can be drawn from the sample b. the auditor has committed a non-sampling error c. the auditor may or may not achieve the tolerable deviation rate at the acceptable risk of over reliance d. the auditor will have to evaluate the results by reference to the principles of discovery sampling 55. In estimation sampling for attributes, which one of the following must be known in order to appraise the results of the auditor’s sample? a. Estimated peso value of the population b. Standard deviation of the values in the population c. Actual deviation rate of the attribute in the population d. Sample size 56. Auditors who prefer statistical to non-statistical sampling believe that the principal advantage of statistical sampling flows from its unique ability to a. define the precision required to provide audit satisfaction b. provide a mathematical measurement of uncertainty c. establish conclusive audit evidence with increased audit effort d. promote a more legally defensible procedural approach 57. If an auditor, planning to use statistical sampling, is concerned with the number of a client’s sales invoices that contain mathematical errors, the auditor would most likely to utilize a. random sampling with replacement b. sampling for attributes c. sampling for variables d. stratified random sampling 58. Which of the following best describes the distinguishing feature of statistical sampling? a. It requires the examination of a smaller number of supporting documents b. It provides a means for measuring mathematically, the degree of uncertainty that results from the examining only part of the population

c. d.

It reduces the problems associated with the auditor’s judgment concerning materiality It is evaluated in terms of two parameters: statistical mean and random selection

59. Which of the following is an advantage of systematic sampling over random number sampling? a. It provides a stronger basis for statistical conclusions b. It enables the auditor to use the more efficient “sampling with replacement” tables c. There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. d. It does not require establishment of correspondence between random numbers and items in the population 60. When using statistical sampling for tests of compliance, an auditor’s evaluation of compliance would include a statistical conclusion concerning whether a. procedural deviations in the population were within an acceptable range b. monetary precision is in excess of a certain pre-determined amount c. the population is not in error by more than a fixed amount d. population characteristics at least once in the population 61. In performing a review of his client’s cash disbursements, a CPA uses systematic sampling with a random art. The primary disadvantage of systematic sampling is that population items a. must be recorded in a systematic pattern before the sample can be drawn b. may occur in a systematic pattern, thus negating the randomness of the sample c. may occur twice in the sample d. must be replaced in the population after sampling to permit valid statistical inference 62. The purpose of test for compliance is to provide reasonable assurance that the accounting control procedures are being applied as prescribed. The sampling method that is most useful when testing for compliance is a. judgment sampling b. attribute sampling c. unrestricted random sampling with replacement d. stratified random sampling 63. An example of sampling attributes would be estimating the a. quantity of specific inventory items b. probability of losing a patent infringement case c. percentage of overdue accounts receivable d. peso value of accounts receivable 64. Which of the following best describes what the auditor means by the rate of occurrence in the attribute sampling plan? a. The number of errors that can reasonably be expected to be found in the population b. The frequency with which a certain characteristic occurs within a population c. The degree of confidence that the sample is representative of the population d. The peso range within which the true population total can be expected to fall 65. When performing a compliance test with respect to control over cash disbursements, a CPA may use a systematic sampling technique a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population

a. b. c. d.

must be recorded in a systematic pattern before the sample can be drawn may occur in a systematic pattern, thus destroying the sample randomness may systematically occur more than once in the sample must be systematically replaced in the population after sampling

66. Which of the following statistical selection techniques is least desirable for use by an auditor? a. systematic selection b. stratified selection c. block selection d. sequential selection 67. An advantage of using statistical sampling techniques is that such techniques a. mathematically measure risk b. eliminate the need for judgmental decisions c. define the values of precision and reliability required to provide audit satisfaction d. have been established in the courts to be superior to judgmental sampling 68. Which of the following best illustrates the concept of sampling risk? a. A randomly chosen sample may not be representative of the population as a whole on the characteristics of interest. b. An auditor may select audit procedures that are not appropriate to achieve the specific objective c. An auditor may fail to recognize errors in the documents examined for the chosen sample d. The documents related to the chosen sample may not be available for inspection 69. Statistical sampling generally may be applied to test compliance with internal accounting control when the client’s internal accounting control procedures a. depend primarily on appropriate segregation of duties b. are carefully reduced to writing and are included in client accounting manuals c. leave on audit trail in the form of documentary evidence of compliance d. enable the detection of material irregularities in the accounting records 70. The estimated error rate obtained from attribute sampling is most useful in satisfying the auditing standard which states a. the work is to be adequately planned, and assistants, if any, are to properly supervised b. sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion c. the examination is to be performed by a person/s having adequate technical training and proficiency as an auditor d. there is to be a proper study and evaluation of the existing internal control as a basis for reliance thereon and for the determination of its resultant extent of the tests of which auditing procedures are to be restricted 71. The tolerable rate of deviations for a compliance test is generally a. lower than the expected rate of errors in the related accounting records b. higher than the expected rate of errors in the related accounting records c. identical to the expected rate of errors in the related accounting records d. unrelated to the expected rate of errors in the related accounting records 72. If certain forms are not consecutively numbered

a. b. c. d.

selection of a random sample probably is not possible systematic sampling may be appropriate stratified sampling should be used random number tables cannot be used

73. When using a statistical sampling plan, the auditor would probably require a smaller sample if a) population increases b) desired precision interval narrows. c) desired reliability decreases. d) expected error occurrence rate increases. 74. Which of the following is not a type of statistical method that provides results in dollar terms? a) attribute sampling. b) peso-unit sampling. c) variables sampling. d) sampling with probability proportional to size. 75. When auditors sample for tests of details of balances, the objectives is to determines whether the account balance a) is correct. b) contains material errors. c) is fairly stated. d) is material in comparison to operating income. 76. A method in sampling in which all the items in the population are divided into two or more sub-population is a. variables sampling. b. attributes sampling. c. stratified sampling. d. divisible sampling. 77. When selecting a stratified sample, the sample is a. determined for the un-stratified population and then apportioned to each stratum. b. determined for each stratum and selected from that stratum. c. determined for each stratum and selected randomly from the entire un-stratified population. d. always larger than if un-stratified sampling had been used. 78. An inherent part of the sampling that results from testing less than the entire population is a. the acceptable risks of over-reliance b. sampling risks c. the upper bound d. inherent risks 79. The estimated total population error is calculated as a. the point estimated plus the sampling error b. the point estimate minus the sampling error c. the sampling error minus the point estimate d. none of the above

80. The final step in the evaluation of the audit results is the decision to a. accept the population as fairly stated or to require further action b. determine sampling error and calculate the estimated total population error c. project the point estimated d. determine the error in each sample 81. The most commonly used method of statistical sampling for tests of details of balance is a. attributes sampling b. variables sampling c. peso-unit sampling d. discovery sampling 82. The most commonly used method of statistical sampling for tests of details of balance is a. attributes sampling b. variables sampling c. peso-unit sampling d. discovery sampling 83. The risk the auditor is willing to take of accepting a balance as correct when the true error in the balance is equal to or greater than the tolerable misstatement is a. the upper bound b. the tolerable risk c. the acceptable risk of incorrect acceptance d. the lower bound 84. The primary factor from the audit risk model which affects the auditor’s decision about acceptable risk of incorrect acceptance is a. Control risk b. Audit risk c. Detection risk d. Inherent risk 85. In the application of statistical technique to the estimation of peso amounts, a preliminary sample is usually taken primarily for the purpose of estimating population. a. Variability b. Mode c. Range d. Median 86. The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is a. difference estimation b. mean-per-unit estimation c. ratio estimation d. peso-unit sampling 87. The variables sampling method which generally results in smaller sample sizes than any other method is a. difference estimation b. mean-per-unit estimation c. ratio estimation

d.

peso-unit sampling

88. If the size of the errors in population is proportionate to the recorded value of the population items, smaller sample sizes will be generated using a. difference estimation b. mean-per-unit estimation c. ratio estimation d. peso-unit sampling 89. The auditor is concerned with the audited value rather than the error amount of each item in the sample when using a. difference estimation b. mean-per-unit estimation c. ratio estimation d. peso-unit sampling 90. The average audited value of items in the sample multiplied times the population size is a. computed precision interval b. point estimate c. recorded book value d. upper confidence limit 91. Stratification is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with a. difference estimation b. mean-per-unit estimation c. ratio estimation d. discovery sampling 92. While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. It was, in fact, not materially misstated. This situation illustrates the risk of a. incorrect rejection b. incorrect acceptance c. assessing control risk too low d. assessing control risk too high 93. Which of the following would be designed to estimate a numerical measurement of a population, such as a peso value? a. Sampling for variables b. Sampling for attributes c. Discovery sampling d. Numerical sampling 94. There are many kinds of statistical estimates than an auditor may find useful, but basically every accounting estimate is either of a quantity or of an error rate. The statistical terms that roughly correspond to “quantities” and “error rate”, respectively, are a. attributes and variables b. variables and attributes

c. d.

constants and attributes constants and variables

95. Tolerable error is a statistical measure of the maximum likely difference between the sample estimate and the true but unknown population total, and is directly related to a. reliability of evidence b. relative risk c. materiality d. cost benefit analysis 96. An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the a. sample mean b. standard deviation c. standard error of the sample men d. estimated population total minus the actual population 97. An increase in the tolerable misstatement has what effect on the planned allowance for sampling risk? a. Increases b. Decreases c. No effect d. Indeterminate 98. Which of the following is not generally used for selecting samples? a. Random number tables b. Random number generators c. Physical representation numbers d. Systematic selection 99. In performing a test of a control last year the auditors specified a tolerable deviation rate of X percent. This year the auditors have specified a tolerable rate of less than X percent. Assuming that all other factors remain the same, which of the following is true regarding the relationship between this year’s sample size compared to last year’s sample size? a. This year’s samples is larger than last year’s sample b. This year’s sample is smaller than last year’s sample c. This year’s sample is equal to last year’s sample d. This year’s sample is indeterminate in relation to last year’s sample 100. The auditor using non-statistical attributes sampling, but who nevertheless has chosen the sample in conformity with random selection procedures: a. b. c. d.

101.

Need not consider the risk of assessing control risk too low Had committed a nonsampling error Will have to use discovery sampling techniques to evaluate the results Should compare the deviation rate of the sample to the tolerable rate

When using sampling for tests of controls, which of the following audit consequences may follow?

a. b. c. d.

102.

Which of the following is generally not true about statistical sampling as compared to non-statistical sampling? a. b. c. d.

103.

Increases. Decreases. No effect. Indeterminate.

What effect does obtaining a sample with a standard deviation larger than that estimated during planning have on the adjusted allowance for sampling risk? a. b. c. d.

107.

Sample size. Risk of assessing control risk too low. Number of deviations in the population. Number of deviations found in the sample.

Increases in the planned allowance for sampling risk have what effect on required sample size? a. b. c. d.

106.

Increasing the size of audit samples. Stratifying audit samples. Adequately planning audit samples. Using statistical sampling techniques.

When using statistical sampling, which of the following need not be known to evaluate the results of an attribute sample? a. b. c. d.

105.

Statistical samples are more representative of the population. Statistical sample plans involve additional costs of evaluation. Statistical sampling allows a more objective evaluation of sample results. Statistical sampling may assist the auditors in designing efficient samples.

Which of the following may be used to reduce the risk of nonsampling errors? a. b. c. d.

104.

If sample results indicate that compliance is adequate, but in fact it is not, control risk will be assessed too low. If sample results indicate that compliance is adequate, but in fact it is not, control risk will be assessed too high. If sample results indicate that compliance is inadequate, but in fact it is adequate, the audit is likely to be faulty because of reduced substantive tests. If sample results indicate that compliance inadequate, but in fact it is adequate, control risk will be assessed too low.

Increases. Decreases. No effect. Indeterminate.

Which of the following is a correct statement with respect to evaluating results when using non-statistical sampling for substantive tests?

a. b. c. d.

108.

Which of the following statistical sampling techniques involves taking samples in a series of stages? a. b. c. d.

109.

d.

It provides a stronger basis for statistical conclusions. It enables the auditor to use the more efficient “sampling with replacement” tables. There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. It does not require establishment of correspondence between random numbers and items in the population.

An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the a. b. c. d.

113.

Statistical error. Sampling error. Standard error of the mean. Non-sampling error.

Which of the following is an advantage of systematic sampling over random number sampling? a. b. c.

112.

The risk of assessing control risk too low. The risk of assessing control risk too high. The risk of incorrect acceptance. The risk of incorrect rejection.

The auditors’ failure to recognize an error in an amount or an error in an internal control data processing procedure is described as a a. b. c. d.

111.

Systematic sampling. Sequential sampling. Continuous sampling. Multiple location sampling.

Which of the following types of risk is of critical importance to auditors in performing tests of controls? a. b. c. d.

110.

When the projected misstatement exceeds the tolerable misstatement, the auditor should conclude that the population is not misstated. The closer the projected misstatement is to the tolerable misstatement, the higher the risk of material misstatement. When the projected misstatement is equal to zero, the auditors may conclude with certainty that no misstatements exist in the account. When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated.

Sample mean. Standard deviation. Standard error of the sample mean. Estimated population total minus the actual population total.

Statistical sampling generally may be applied to test internal control when the client’s internal control procedures

a. b. c. d.

Depend primarily on appropriate segregation of duties. Are carefully reduced to writing and are included in client accounting manuals. Leave an audit trail in the form of evidence of compliance. Enable the detection of material irregularities in the accounting records.

114. Use of the ratio estimation sampling technique to estimate peso amounts is inappropriate when a. b. c. d. 115.

An advantage of using statistical sampling techniques is that such techniques a. b. c. d.

116.

Determine the probability of the auditor’s conclusion based upon reliance factors. Determine that financial statements taken as a whole are not materially in error. Estimate the reliability of substantive tests. Estimate the range of procedural deviations in the population.

If all other factors specified in an attributes sampling plan remain constant, changing the specified tolerable rate from 6% to 10%, and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to a. b. c. d.

119.

Population increases. Desired allowance for sampling risk decreases. Desired risk of incorrect acceptance increases. Expected deviation rate increases.

The objective of the tolerable rate in sampling for tests of controls of an internal control structure is to a. b. c. d.

118.

Mathematically measure risk. Eliminate the need for judgmental decisions. Define the values of allowance for sampling risk and tolerable misstatement required to provide audit satisfaction. Have been established in the courts to be superior to judgmental sampling.

When using a statistical sampling plan, the auditors would probably require a smaller sample if the a. b. c. d.

117.

The total book value is known and corresponds to the sum of all individual book values. A book value for each sample item is unknown. There are some observed differences between audited values and book values. The audited values are nearly proportional to the book value.

Increase. Remain the same. Decrease. Change by 4%.

When performing a test of a control over cash disbursements, a CPA may use a systematic sampling technique with a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population a. b. c. d.

Must be recorded in a systematic pattern before the sample can be drawn. May occur in a systematic pattern, thus destroying the sample randomness. May systematically occur more than once in the sample. Must be systematically replaced in the population after sampling.

120.

Statistical sampling provides a technique for a. b. c. d.

121.

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client’s internal control procedures. One of the checks in the chosen sample of 20 cannot be found. The auditor should consider the reasons for this limitation and a. b. c. d.

122.

Evaluate the results if the sample size had been 19. Treat the missing check in the same manner as the majority of the other 19 checks, i.e., countersigned or not. Treat the missing check in the same manner as the majority of the other 19 checks, i.e., countersigned or not. Choose another check to replace the missing check in the sample.

There are many kinds of statistical estimates that an auditor may find useful, but basically every accounting estimate is either of a quantity or of an error rate. The statistical terms that roughly correspond to “quantities” and “error rate”, respectively, are a. b. c. d.

123.

Exactly defining materiality. Greatly reducing the amount of substantive testing. Eliminating judgment in testing. Measuring the sufficiency of evidential matter.

Attributes and variables. Variables and attributes. Constants and attributes. Constants and variables.

Which of the following sampling methods is most useful to auditors when testing controls? a. b. c. d.

Stratified random sampling. Attributes sampling. Variable sampling. Unrestricted random sampling with replacement.

124. Which of the following best illustrates the concept of sampling risk? a. b. c. d. 125.

Which of the following statistical selection techniques is least desirable for use by an auditor? a. b. c. d.

126.

A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest. An auditor may select audit procedures that are not appropriate to achieve the specific objective. An auditor may fail to recognize errors in the documents examined for the chosen sample. The documents related to the chosen sample may not be available for inspection.

Systematic selection. Stratified selection. Block selection. Sequential selection.

Which of the following statistical sampling plans does not use a fixed sample size for tests of controls? a.

Ratio estimation.

b. c. d. 127.

Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control? a. b. c. d.

128.

b. c. d.

Sampling unit. Sample. Population unit. Population.

To determine the sample size in attribute sampling it is not necessary to consider the a. b. c. d.

132.

Lower assessment of control risk. Greater reliance on analytical procedures. Smaller expected frequency of misstatements. Smaller measure of tolerable misstatement.

The set of all the elements that constitute an account balance or class of transactions is referred to as a a. b. c. d.

131.

The population size has little or no effect on determining sample size except for every small populations. The expected population deviation rate has little or no effect on determining sample size except for very small populations. As the population size doubles, the sample size also should double. For a given tolerable rate, a larger sample size should be selected as the expected population deviation rate decreases.

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? a. b. c. d.

130.

Number of items in the population. Total peso amount of the items to be sampled. Acceptable level of risk of assessing control risk too low. Tolerable misstatement.

Which of the following statements is correct concerning statistical sampling in tests of controls? a.

129.

Sequential sampling. Discovery sampling. Variables sampling.

Sample risk. Sample deviation rate. Tolerable deviation rate. Expected population deviation rate.

The steps for performing the procedures to use audit sampling for test of controls audits would not include a. b. c. d.

Perform the procedures. Determine sample size. Select the sample. Evaluate the evidence.

133.

The risk of assessing control risk too high is the probability that the compliance evidence in the sample indicates a. b. c. d.

134.

In the audit model the tests of details is an expression of the a. b. c. d.

135.

Misunderstanding of accounting principles. Sampling error. Management override of an internal control procedure. Risk of incorrect acceptance.

The further misstatement remaining undetected in units not selected in sample is referred to as a. b. c. d.

139.

Projected likely misstatement. Tolerable misstatement. Known misstatement. Possible misstatement.

The amount by which a projected likely misstatement differs from an actual misstatement as a result of the sample not being representative would typically arise from a. b. c. d.

138.

Tolerable misstatement. Expected population deviation rate. Risk of incorrect acceptance. Risk of incorrect rejection.

Total amount of actual monetary error found in a sample is referred to as a. b. c. d.

137.

Risk of incorrect acceptance and incorrect rejection. Analytical procedures and tests of details risk. Inherent risk and control risk. Tolerable misstatement and expected peso misstatement.

To determine sample size for auditing account balances one would not need to establish decision criteria for a. b. c. d.

136.

Low control risk when the actual degree of compliance does not justify a low control risk assessment. Low control risk when the actual degree of compliance justifies a low control risk assessment. High control risk when the actual degree of compliance would justify a lower control risk assessment. High control risk when the actual degree of compliance would justify a higher control risk assessment.

Projected likely misstatement. Tolerable misstatement. Known misstatement. Possible misstatement.

The ultimate purpose of control risk assessment is to a. b.

Estimate the overall risk of failing to detect material misstatements. Decide on how much work to do when auditing accounts.

c. d. 140.

When evaluating the control risk assessment an auditor would not accept the following related test of detail risks and sample size a. b. c. d.

141.

Find the population deviation rate. Find sample size in left margin. Find the number of actual deviations for the sample size. Find the computer upper limit related to sample size and number of deviations.

To statistically evaluate test of controls audit evidence an auditor would not need to know a. b. c. d.

146.

Tolerable rate is 0.04. Critical rate of occurrence is 0.04. Sample had two deviations. Expected population deviation rate is 0.04.

The procedures for statistical evaluation of test of controls audit evidence with the evaluation tables would not include the following step a. b. c. d.

145.

Specifying the controls for audit. Quantifying the decision criteria. The statistical evaluation. Selecting the random sample.

if an auditor tested 50 transactions and found two deviations from an important control procedure, the auditor could conclude from this test that the a. b. c. d.

144.

The population deviation rate is low enough to meet the decision criterion. The population deviation rate may be higher than the decision criterion. The control risk can be assessed at the level associated with the CUL. The control risk should be assessed at a higher level.

Auditors generally find that the most difficult problems in using attribute sampling would not include a. b. c. d.

143.

The weaker the control, the smaller the test of details risk. The smaller the test of details risk, the greater the sample size required. The weaker the control, the greater the sample size required. The stronger the control, the higher the test of details risk.

if an auditor calculated a CUL at 5 percent when the tolerable deviation criterion was 4 percent, both at the same risk of assessing control risk too low. a. b. c. d.

142.

Determine the risk of incorrect acceptance. Determine the probability that errors entered the accounts.

Acceptable risk of assessing the control risk too low. Actual deviations in sample. Actual population size. Sampling error-adjusted upper limit.

An auditor wanted to perform a test of controls audit of recorded sales with the concern of finding as few as 50 fictitious sales in a population of 5,000 recorded invoices and achieve at least a 0.75 probability of finding at least one incorrect invoice was found the auditor could conclude

a. b. c. d.

147.

In discovery sampling the desired probability of one occurrence is defined as a. b. c. d.

148.

Risk of incorrect rejection. Risk if incorrect acceptance. Audit risk. Control risk.

In determining sample size in classical variable sampling one would not include a. b. c. d.

152.

The acceptable risk of incorrect acceptance The tolerable risk The upper bound The lower bound

Variable sampling for account balance auditing is primarily concerned with the a. b. c. d.

151.

Population deviation rate. Probability of one occurrence. Critical rate of occurrence. Sample size.

The risk the auditor is willing to take in accepting a balance as correct when the true error in the balance is equal to or greater than the tolerable misstatement is a. b. c. d.

150.

1 minus a relevant risk of assessing control risk too high. 1 minus a relevant risk of assessing control risk too low. The critical rate of occurrence. The population deviation rate.

An auditor planning to use discovery sampling would not need to know the a. b. c. d.

149.

The actual number of errors in the population was less than 50. The actual number of errors in the population was greater than 50. The actual rate of incorrect entries in the sample was less than 1 percent with a .75 probability of being right. The actual rate of incorrect entries in the population was more than 1 percent with a .75 probability of being right.

Upper error limit. Expected peso misstatement. Tolerable misstatement. Coefficient representing the risk of incorrect rejection.

The maximum monetary misstatement that can exist in an account without causing the financial statements to be materially misstated is called the a. b. c. d.

Possible likely misstatement. Known misstatement. Projected likely misstatement. Tolerable misstatement.

153.

Foote, CPA audited the Acme Co. accounts receivable with a book value of P3 million and 4,400 accounts. In a sample of 400 accounts Foote, CPA found P13,200 understatement errors. The projected likely misstatement for the sample is a. b. c. d.

154.

The difference between an unknown total amount of overstatement in the population and the projected likely misstatement would be a. b. c. d.

155.

Effectiveness of the audit. Efficiency of the audit. Preliminary estimates of materiality levels. Allowable risk of tolerable misstatement.

Which of the following best illustrates the concept of sampling risk? a. b. c. d.

159.

Eliminate the risk of non-sampling errors. Reduce the level of audit risk and materiality to relatively low amount. Measure the sufficiency of the evidential matter obtained. Minimize the failure to detect errors and irregularities.

The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the a. b. c. d.

158.

Stratum of the accounting population be given equal representation in the sample. Item in the accounting population be randomly ordered. Item in the accounting population should have an opportunity to be selected. Item must be systematically selected using replacement.

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to a. b. c. d.

157.

Known misstatement. Possible misstatement. Maximum risk of incorrect rejection. Maximum risk of incorrect acceptance.

An underlying feature of random-based selection of items is that each a. b. c. d.

156.

P13,200. P145,200. P272,727. P435,600.

A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest. An auditor may select audit procedures that are not appropriate to achieve the specific objective. An auditor may fail to recognize errors in the documents examined for the chosen sample. The documents related to the chosen sample may not be available for inspection.

In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too high (under-reliance) related to the a. b.

Efficiency of the audit. Effectiveness of the audit.

c. d.

Selection of the sample. Audit quality controls.

160. Which of the following statistical selection techniques is least desirable for use by an auditor? a. b. c. d.

Systematic selection. Stratified selection. Block selection. Sequential selection.

161. The size of a sample designed for dual purpose testing should be a. b. c. d.

162.

The expected population deviation rate of client billing errors is 3%. The auditor has established a tolerable rate of 5%. In the review of client invoices the auditor should use a. b. c. d.

163.

Discovery sampling. Numerical sampling. Sampling for attributes. Sampling for variables.

Which of the following statements is correct concerning statistical sampling in tests of controls? a. b. c. d.

165.

Stratified sampling. Variable sampling. Discovery sampling. Attribute sampling.

Which of the following sampling methods would be used to estimate a numerical measurement of a population, such as a peso value? a. b. c. d.

164.

The larger of the samples that would otherwise have been designed for the two separate purposes. The smaller of the samples that would otherwise have been designed for the two separate purposes. The combined total of the samples that would otherwise have been designed for the two separate purposes. More than the larger of the samples that would otherwise have been designated for the two separate purposes, but less than the combined total of the samples that would otherwise have been designed for the two separate purposes.

Deviations from control procedures at a given rate usually result in misstatements at a higher rate. As the population size doubles, the sample size should also double. The quantitative aspects of deviations are not considered by the auditor. There is an inverse relationship between the sample size and the tolerable rate.

To determine the sample size for a test of controls, as auditor should consider the tolerable deviation rate, the allowable risk of assessing control risk too low, and the a. b. c. d.

Expected deviation rate. Upper precision limit. Risk of incorrect acceptance. Risk of incorrect rejection.

166.

Which of the following statistical sampling plans does not use a fixed sample size for tests of controls? a. b. c. d.

167.

If certain forms are not consecutively numbered a. b. c. d.

168.

Number of items in the population. Total peso amount of the items to be sampled. Acceptable level of risk of assessing control risk too low. Tolerable misstatement.

When performing a test of a control with respect to control over cash receipts, an auditor may use a systematic sampling technique with a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population a. b. c. d.

170.

Selection of a random sample probably is not possible. Systematic sampling may be appropriate. Stratified sampling should be used. Random number tables cannot be used.

Which of the following factors does an auditor generally need to consider in planning a particular audit sample for a test of control? a. b. c. d.

169.

Peso-unit sampling. Sequential sampling. PPS sampling. Variables sampling.

Must be systematically replaced in the population after sampling. May systematically occur more than once in the sample. Must be recorded in a systematic pattern before the sample can be drawn. May occur in a systematic pattern, thus destroying the sample randomness.

Which of the following combinations results in a decrease in sample size in a sample for attributes?

Risk of assessing control risk too low

Expected population deviation rate Tolerable rate

a. b. c. d. 171.

Increase Decrease Increase Increase

Decrease Increase Increase Decrease Increase Decrease Increase Increase

The likelihood of assessing control risk too high is the risk that the sample selected to test controls a. b. c.

Does not support the tolerable misstatement for some or all of management’s assertions. Does not support the auditor’s planned assessed level of control risk when the true operating effectiveness of the control structure justifies such as assessment. Contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transaction classes.

d.

172.

An auditor is testing internal control procedures that are evidenced on an entity’s vouchers by matching random numbers with voucher numbers. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher a. b. c. d.

173.

c. d.

b. c. d.

A recorded disbursement that does not show evidence of required approval may nevertheless be a transaction that is properly authorized and recorded. Deviations would result in errors in the accounting records only if the deviations and the errors occurred on different transactions. Deviations from pertinent control procedures at a given rate ordinarily would be expected to result in errors at a higher rate. A recorded disbursement that is properly authorized may nevertheless be a transaction that contains a material error.

The objective of the tolerable rate in sampling for tests of controls of an internal control structure is to a. b. c. d.

176.

Choose another purchase order to replace the missing purchase order in the sample. Consider this test of control invalid and proceed with substantive tests since internal control cannot be relied upon. Treat the missing purchase order as a deviation for the purpose of evaluating the sample. Select a completely new set of 30 purchase orders.

When assessing the tolerable rate, the auditor should consider that, while deviations from control procedures increase the risk of material misstatements, such deviations do not necessarily result in errors. This explains why a.

175.

Constitutes a deviation. Has been properly voided. Cannot be located. Represents an immaterial peso amount.

An auditor plans to examine a sample of 20 purchase orders for proper approvals as prescribed by the client’s internal control procedures. One of the purchase orders in the chose sample of 20 cannot be found, and the auditor is unable to use alternative procedures to test whether that purchase order was properly approved. The auditor should a. b.

174.

Contains proportionately fewer monetary errors or deviations from prescribed internal control structure policies or procedures than exist in the balance or class as a whole.

Determine the probability of the auditor’s conclusion based upon reliance factors. Determine that financial statements taken as a whole are not materially in error. Estimate the reliability of substantive tests. Estimate the range of procedural deviations in the population.

The tolerable rate of deviations for a test of a control is generally a. b. c. d.

Lower than the expected rate of errors in the related accounting records. Higher than the expected rate of errors in the related accounting records. Identical to the expected rate of errors in related accounting records. Unrelated to the expected rate of errors in the related accounting records.

177.

As a result of tests of controls, an auditor assessed control risk too low and decreased substantive testing. This occurred because the true deviation rate in the population was a. b. c. d.

178.

In performing tests of controls over authorization of cash disbursements, which of the following sampling methods would be most appropriate? a. b. c. d.

179.

b. c. d.

Sample rate of deviation is less than the expected rate of deviation used in planning the sample. Tolerable rate less the allowance for sampling risk exceeds the sample rate of deviation. Sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate. Sample rate of deviation plus the allowance for sampling risk equals the tolerable rate.

If the auditor is concerned that a population may contain exceptions, the determination of a sample size sufficient to include at least one such exception is a characteristic of a. b. c. d.

182.

Modify the planned assessed level of control risk because the tolerable rate plus the allowance for sampling risk exceeds the expected population deviation rate. Accept the sample results as support for the planned assessed level of control risk because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate. Accept the sample results as support for the planned assessed level of control risk because the tolerable rate less the allowance for sampling risk equals the expected population deviation rate. Modify the planned assessed level of control risk because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate.

An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control risk when the a. b. c. d.

181.

Ratio. Attributes. Variables. Stratified.

What is an auditor’s evaluation of a statistical sample for attributes when a test of 50 documents results in 3 deviations if tolerable rate is 7%, the expected population deviation rate is 5%, and the allowance for sampling risk is 2%? a.

180.

Less than the risk of assessing control risk too low based on the auditor’s sample. Less than the deviation rate in the auditor’s sample. More than the risk of assessing control risk too low based on the auditor’s sample. More than the deviation rate in the auditor’s sample.

Discovery sampling. Variables sampling. Random sampling. Peso-unit sampling.

Which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of several unusually large cash disbursement? a. b. c.

Increase the sample size to reduce the effect of the unusually large disbursements. Continue to draw new samples until all the unusually large disbursements appear in the sample. Set the tolerable rate of deviation at a lower level than originally planned

d. 183.

When planning a sample for a substantive test of details, an auditor should consider tolerable misstatement for the sample. This consideration should a. b. c. d.

184.

b. c. d.

Greater reliance on internal controls. Greater reliance on analytical procedures. Smaller reliance on analytical procedures. Smaller measure of tolerable misstatement.

In the estimation sampling for variables, 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? a. b. c. d.

188.

To increase the confidence level at which a decision will be reached from the results of the sample selected. To determine the occurrence rate for a given characteristic in the population being studied. To decrease the effect of variance in the total population. To determine the precision range of the sample selected.

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? a. b. c. d.

187.

Increase. Remain the same. Decrease. Be recalculated using a binomial distribution.

What is the primary objective of using stratification as a sampling method in auditing? a.

186.

Be related to the auditor’s business risk. Not be adjusted for qualitative factors. Be related to preliminary judgements about materiality levels. Not be changed during the audit process.

An auditor initially planned to use unrestricted random sampling with replacement in the examination of accounts receivable. Later, the auditor decided to use unrestricted random sampling without replacement. As a result only of this decision, the sample size should a. b. c. d.

185.

Stratify the cash disbursements population so that the unusually large disbursements are selected.

The qualitative aspects of errors. The total peso amount of the population. The acceptable level of risk. The estimated rate of misstatements in the population.

While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. It was, in fact, not materially misstated. This situation illustrates the risk of a. b. c. d.

Incorrect rejection. Incorrect acceptance. Assessing control risk too low. Assessing control risk too high.

189.

Which of the following statements is correct concerning probability proportional to size (PPS) sampling, also known as peso unit sampling? a. b. c. d.

190.

In the application of statistical techniques to the estimation of peso amounts, a preliminary sample is usually taken primarily for the purpose of estimating the population. a. b. c. d.

191.

Unstratified mean-per-unit. Probability-proportional-to-size Stop or go. Ratio estimation.

The major reason that the difference and ratio estimation methods would be expected to produce audit efficiency is that the a. b. c. d.

194.

The total book value is known and corresponds to the sum of all the individual book values. A book value for each sample item is unknown. There are some observed differences between audited values and book values. The audited values are nearly proportional to the book values.

An auditor is performing substantive tests of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past experience indicates numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate? a. b. c. d.

193.

Variability. Mode. Range. Median.

Use of the ratio estimation sampling technique to estimated peso amounts is inappropriate when a. b. c. d.

192.

The sampling distribution should approximate the normal distribution. Overstated units have a lower probability of sample selection than units that are understated. The auditor controls the risks of incorrect acceptance by specifying that risk level for the sampling plan. The sampling interval is calculated by dividing the number of physical units in the population by sample size.

Number of members of the populations of differences or ratios is smaller than the number of members of the population of book values. Beta risk may be completely ignored. Calculations required in using difference or ratio estimation are less arduous and fewer than those required when using direct estimation. Variability of the populations of differences or ratios is less than that of the populations of book values or audited values.

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

An auditor needs to estimate the peso amount of the standard deviation of the population to use classical variables sampling. An assumption of PPS sampling is that the underlying accounting population is normally distributed.

c. d.

195.

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to a. b. c. d.

196.

Minimize the failure to detect errors and irregularities. Eliminate the risk of non-sampling errors. Reduce the level of audit risk and materiality to relatively low amount. Measure the sufficiency of the evidential matter obtained.

Which of the following most likely would be an advantage in using classical variables sampling rather than probability-proportional-to-size (PPS) sampling? a. b. c. d.

197.

A classical variables sample needs to be designed with special considerations to include negative balances in the sample. The selection of zero balances usually does not require special sample design considerations when using PPD sampling.

An estimate of the standard deviation of the population’s recorded amounts is not required. The auditor rarely needs the assistance of a computer program to design an efficient sample. Inclusion of zero and negative balances generally does not require special design considerations. Any amount that is individually significant is automatically identified and selected.

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 a. b. c. d.

The deviation rates of both the auditor’s sample and the population exceed the tolerable rate. The deviation rates of both the auditor’s sample and the population are less than the tolerable rate. The deviation rate in the auditor’s sample is less than the tolerable rate, but the deviation rate in the population exceeds the tolerable rate. The deviation rate in the auditor’s sample exceeds the tolerable rate, but the deviation rate in the population is less than the tolerable rate.

What is statistical sampling in auditing?

Which type of sampling should be used to test controls?

What is audit sampling for test of controls and substantive tests?

Which type of sampling plan is most frequently used in testing control activities?