Which of the following combinations results in a decrease in sample size in an attribute sample?

Which of the following combinations results in a decrease in sample size in an attribute sample?

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March 20, 2022/in /

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

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Risk of assessing control risk too low

Tolerable rate

Expected population deviation rate

a.

Increase

Decrease

Increase

b.

Decrease

Increase

Decrease

c.

Increase

Increase

Decrease

d.

Increase

Increase

Increase

Which of the following combinations results in a decrease in sample size in an attribute sample?

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which of the following combinations results in the greatest decrease in sample size 2086202.

Which of the following combinations results in the greatest decrease in sample size in an attribute sample for a test of controls?

Which of the following combinations results in a decrease in sample size in an attribute sample?

Questions 8–15 and 8–16 are based on the following information: An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1 percent risk of assessing control risk too low for the assertion that not more than 7 percent of the sales invoices lacked approval. The auditor estimated from previous experience that about 2½ percent of the sales invoices lacked approval. A sample of 200 invoices was examined, and 7 of them were lacking approval. The auditor then determined the computed upper deviation rate to be 8 percent.

which of the following combinations results in the greatest decrease in sample size 2086202

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Which of the following combinations results in a decrease in sample size in an attribute sample?

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

align=”left”>

Risk of assessing control risk too low

Tolerable rate

Expected population deviation rate

a.

Increase

Decrease

Increase

b.

Decrease

Increase

Decrease

c.

Increase

Increase

Decrease

d.

Increase

Increase

Increase

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Which of the following combinations results in a decrease in sample size in an attribute sample?

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an auditor desired to test credit approval on 10 000 sales invoices processed during 602515

show how the truck would be reported in the december 31 2014 balance sheet 617348

In which of the following situations is attribute sampling likely to be used?

Determining the estimated number of occurrences of improperly authorized cash disbursements.The auditor uses attribute sampling to test the effectiveness of control. This sampling method allows the auditor to determine the occurrence rate of deviations and its relation to the tolerable rate of deviation. A control, such as the proper approval and authorization of cash disbursements, can be tested for effectiveness using attribute sampling.

Which of the following combinations results in a decrease in sample size in an attribute sample?Allowable risk of overreliance:Tolerable rate:Expected population deviation rate:

increase increase decreaseTo determine the sample size for a test of controls, the auditor considers (1) the tolerable rate of deviations from the control being tested, (2) the expected actual rate of deviations, and (3) the allowable risk of overreliance. An increase in the allowable risk of overreliance, an increase in the tolerable rate, and a decrease in the expected rate each has the effect of reducing the required sample size.

Which of the following would be a consideration in planning an auditor’s sample for a test of controls?

The auditor’s allowable risk of overreliance.A test of controls is an application of attribute sampling. The initial size for an attribute sample is based on (1) the desired assurance (complement of the risk of overreliance) that the tolerable population deviation rate is not exceeded by the actual rate, (2) the tolerable population deviation rate, (3) the expected population deviation rate, and (4) the population size. However, a change in the size of the population has a very small effect on the required sample size when the population is large. Consequently, population size is often not considered unless it is small.

Fact Pattern:An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1% risk of overreliance (99% confidence) that not more than 7% of the sales invoices lacked approval. The auditor estimated from previous experience that about 2.5% of the sales invoices lacked approval. A sample of 200 invoices was examined, and seven of them were lacking approval. The auditor then determined the achieved upper deviation limit to be 8%.The allowance for sampling risk was

4.5%The allowance for sampling risk equals the achieved upper deviation limit (8%) minus the sample deviation rate (7 ÷ 200 = 3.5%), or 4.5%.

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance. This is an example of which of the following sampling types of risks?

Incorrect acceptance.An auditor is concerned with two aspects of sampling risk in performing substantive tests of details: the risk of incorrect acceptance and the risk of incorrect rejection. The risk of incorrect acceptance is the risk that an auditor erroneously concludes that a material misstatement does not exist when, in fact, it does.

An auditor should consider the tolerable rate of deviation when determining the number of check requests to select for a test to obtain assurance that all check requests have been properly authorized. The auditor should also considerThe Average Dollar Value of the Check Requests:The Allowable Risk of overreliance:

No YesTests of controls, such as tests whether check requests have been properly authorized, are binary in nature. The auditor determines whether the control has been applied. Dollar amounts are irrelevant in this form of testing. However, in sampling, the auditor must consider the acceptable risk of overreliance to determine sample size. The auditor also must estimate a population deviation rate.

An auditor is determining the sample size for an inventory observation using mean-per-unit estimation, which is a variables sampling plan. To calculate the required sample size, the auditor usually determines theVariability in the Dollar Amounts of Inventory Items:Risk of Incorrect Rejection:

YesYesFour factors are considered in determining the sample size for mean-per-unit estimation. Those factors include (1) the population size, (2) an estimate of population variation (the standard deviation), (3) the risk of incorrect rejection (its complement is the confidence level), and (4) the tolerable misstatement (the desired allowance for sampling risk is a percentage thereof, and this percentage is a function of the risk of incorrect rejection and the allowable risk of incorrect acceptance).

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 measure of tolerable misstatement.Holding the risk of incorrect acceptance constant, a reduction in acceptable tolerable misstatement would require the auditor to select a larger sample. The larger sample would reduce the allowance for sampling risk.`

Which of the following statements is true concerning statistical sampling in tests of controls?

Deviations from specific control activities increase the likelihood of misstatements but do not always cause misstatements.Deviations from a specific control increase the risk of misstatements in the accounting records but do not always result in misstatements. Thus, deviations from a specific control at a given rate ordinarily result in misstatements at the financial statement level at a lower rate.

Which of the following statements is true concerning monetary-unit sampling (MUS), also known as probability-proportional-to-size sampling?

The auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan.MUS is one technique whereby the auditor can measure and control the risks associated with observing less than 100% of the population. The auditor can quantify and measure the risk of accepting a client’s recorded amount as fair when it is materially misstated.

Which of the following objectives is achieved when an auditor decides to employ classical variable sampling?

To determine the inventory quantities on hand.After taking a sample and drawing a conclusion about the population, the auditor either accepts or rejects the reported number. This method provides the auditor with evidence to determine the inventory quantities on hand.

Which of the following statements about audit sampling risks is correct for a nonissuer?

The sample size of a test of controls varies inversely withExpected population deviation rate:Tolerable population deviation rate:

NoYesThe expected population deviation rate directly affects the sample size. As it increases, the sample size increases. However, the tolerable population deviation rate varies inversely with sample size. As it decreases, the sample size increases.

As lower acceptable levels of the risk of incorrect acceptance and performance materiality are established, the auditor should plan more work on individual accounts to

An auditor has been assigned to take a monetary-unit sample of a population of vouchers in the purchasing department. The population has a total recorded amount of $300,000. The auditor believes that a maximum misstatement of $900 is acceptable and would like to have 95% confidence in the results. (The confidence factor at 95% and zero misstatements = 3.00.) Additional information is provided in the opposite column.Given a random start of $50 as the first dollar amount, what is the number of the fourth voucher to be selected, assuming that the sample size will be 1,000?

8The vouchers have a recorded amount of $300,000, and 1,000 items are to be sampled, so every 300th dollar will be chosen. Given a random start of $50, the vouchers containing the 50th, 350th, 650th, and 950th dollars will be selected. The cumulative amount of the first eight vouchers is $1,030. Accordingly, voucher 8 should be the fourth voucher audited because it contains the 950th dollar.

The major reason that the difference and ratio estimation methods are expected to produce audit efficiency is that the

Variability of the populations of differences or ratios is less than that of the populations of carrying amounts or audited values.Difference estimation approximates total misstatement in the population by calculating the mean difference between the audited and carrying amounts in the sample and then multiplying by the number of population items. Ratio estimation approximates the total population misstatement by multiplying the proportion of the sample misstatement times the population carrying amount. The variability in both of these estimates is likely to be smaller than the variability within the population. Because the sample size varies directly with the variability of the population, the use of differences or ratios will usually allow for smaller sample sizes and greater efficiency in sampling.

Which of the following types of sampling allows an auditor to quantify sampling risk?

Attribute.Sampling risk is the risk that the sample selected does not represent the population. The results of statistical (probability) sampling are objective and subject to the laws of probability. Sample items are randomly selected, and appropriate statistical methods are used to evaluate the results. Consequently, sampling risk can be quantified and controlled, and the degree of reliability desired (the confidence level) can be specified. The auditor uses statistical sampling in tests of controls (attribute sampling) to test their effectiveness. Attribute sampling enables the auditor to estimate the occurrence rate of deviations and to determine its relation to the tolerable deviation rate.

A CPA’s client wishes to determine inventory shrinkage by weighing a sample of inventory items. If a stratified random sample is to be drawn, the strata should be identified in such a way that

Each stratum differs as much as possible with respect to expected shrinkage, but the shrinkages expected for items within each stratum are as close as possible.When the items in a population are heterogeneous, it may be advantageous to stratify the population into homogeneous subpopulations. Each stratum should differ from the others, but the items within each stratum should be similar.

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

Inclusion of zero and negative balances usually does not require special design considerations.MUS is most useful if few misstatements are expected, and overstatement is the most likely kind of misstatement. One disadvantage of MUS is that it is designed to detect overstatements. It is not effective for estimating understatements. The smaller the item, the less likely it will be selected in the sample, but the more likely the item is understated.

What are the three factors that affect sample size when performing attribute sampling?

To determine attribute testing sample sizes, the auditor needs to determine the value for three inputs: desired confidence level, tolerable exception rate, and expected exception rate.

Which of the following factors has the greatest effect on sample size?

Of all the factors to be considered, the population size has the greatest effect on the sample size.

For which of the following audit tests would an auditor most likely use attribute testing?

Explanation: Choice “D” is correct. Attribute sampling examines the rate of occurrence in a sample: the attribute either exists or does not exist. Therefore, attribute sampling is more useful for tests of controls, such as the examination of time cards for proper approval.

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

Terms in this set (9) Which of the following sampling methods would be used to estimate a numeric measurement of a population, such as a dollar value? a. Random sampling.