Flashcards in Chapter 8 Deck (37):

1

## The selection and evaluation of less than 100 percent of the items in a population of audit relevance selected in such a way that the auditor expects the sample top be representative of the population and thus likely to provide a reasonable basis for conclusions about the population

### Audit Sampling

2

## Two forms of Audit Sampling

### Statistical and Non-Statistical

3

## Research suggest what type of Audit Sampling is more common?

### Non-Statistical

4

## AU 530.14 states what?

### The amount of Statistical and Non-Statistical sampling should be about the same size.

5

## The possibility that the sample drawn is not representative of the population and that, as a result, the auditor will reach an incorrect conclusion.

### Sampling Risk

6

## A sample where the the evaluatoin of that smaple results leads to the same conclusion that would be drawn if the same procedures where applied to the entire population.

### Representative Sample

7

## Two Types of Decision Errors with Sampling

###
1. Risk of incorrect rejection (Type 1)

2. Risk of incorrect acceptance (Type 2)

8

## Type 1 errors relate to what quality of the audit?

### Efficenciy

9

## Type 2 errors relate to what quality of the audit?

### Effectiveness

10

## Deciding that the population tested is not acceptable when in reality it is, is what type of error?

### Type 1

11

## Deciding that the population tested is acceptable when in reality it is not, is what type of error?

### Type 2

12

## Nonsampling and Sampling risk make up what?

### Detection Risk

13

## Nonsampling Risk is what?

### The auditor reaches an erroneous conclusion for any other reason than sampling risk.

14

## What can limit Nonsampling Risk

###
1. Training

2. Planning

3. Supervision

15

## What is the complement to Sampling Risk?

### Confidence Level

16

## What effect does a larger sample size of on Confidence Level and Sampling Risk?

###
Increases Confidence

Decreases Sampling Risk

17

## An decrease in the difference between the Tolerable Error and Expected Error does what to the sample size?

### Increase the Sample Size

18

## The difference Between Expected Error and Tolerable Error is what?

### Allowance for Sampling risk, or Precision

19

## Typical Sampling Applications (4)

###
1. Inspection of Tangible Assets

2. Inspection of Records or Documents

3. Reperformance

4. Confirmation

20

## Sampling technique that is used to estimate the proportion of a population that possesses a specified characteristic.

### Attribute Sampling

21

## Sampling technique that uses attribute-sampling theory and techniques to estimate the monetary amount of misstatement.

### Monetary-Unit Sampling

22

## Sampling technique that uses normal distribution theory to estimate the dollar amount of misstatement.

### Classical Variable Sampling

23

## Frame

### Physical Representation of the Population

24

## 3 Inputs for Sample Size

###
1. Confidence Level

2. Tolerable Deviation Rate

3. Expected Deviation Rate

25

## The maximum deviation rate from a prescribed control that the auditor is willing to accept and still consider the control effective.

### Tolerable Deviation Rate

26

## The probability that the true but unknown measure of the characteristic of interest is within the specified limits

### Desired Confidence Level

27

## Tolerable Deviation rate is inversely related to what?

### Sample Size

28

## A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest.

### Sampling risk

29

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

### Does not support assessed control risk when the true operating effectiveness of the control justifies such an assessment.

30

## Sample size varies indirectly with what?

### Tolerable deviation rate

31

## What type of sampling would be used for examining supporting documentation for purchases for evidence of proper authorization?

### Attribute Sampling

32

## How should a missing document in a sample be treated?

### As a Deviation

33

## Upper Deviation Rate (UDR)

### Sample Deviation Rate + Allowance for Sampling Risk

34

## Name a type of evidence that most likely utilizes sampling.

### Confirmation

35

## The risk of incorrect rejection is associated with...

### Sampling Risk

36

## What type of statistical testing is likely to be used for a test of controls?

### Attribute Sampling

37