Module E - Attributes of Sampling

Question 1

when is sampling used?

Answer 1

When the need for exact info is less important and the number of items comprising the population is large

Question 2

sampling risk is…

Answer 2

the likelihood that the decision based on the sample differs from the decision if the overall population was looked at

Question 3

sampling risk is caused by selecting a…

Answer 3

non-representative sample

Question 4

sampling risk can be controlled by…

Answer 4

1. determining an appropriate sample size
2. ensuring all items have an equal likelihood of selection
3. evaluating sample results to control risk

Question 5

easiest way to get a representative sample is to…

Answer 5

randomly select

Question 6

non sampling risk is the likelihood that that…

Answer 6

an incorrect conclusion is drawn for reasons unrelated to the sample

Question 7

most common cause of non sampling risk is…

Answer 7

mistakes in evaluation sample items (misinterpreting data)

Question 8

attribute sampling is used to..

Answer 8

estimate the extent to which a characteristic exists within a population (deviation)

Question 9

attributes testing is used the the auditor’s…

Answer 9

study of internal control

Question 10

upper limit rate fo deviation is…

Answer 10

estimate of the rate at which the client’s internal control is failing to function effectively

Question 11

process of attributes sampling

Answer 11

1. estimate upper limit rate of deviation
2. compare to an allowable (tolerable) level

Question 12

steps in sampling: planning

Answer 12

1. determine the objective
2. define the deviation condition
3. define the populations

Question 13

three factors affecting sample size

Answer 13

1. risk of over reliance
2. tolerable rate of deviation
3. expected population deviation rate
4. population size

Question 14

sampling risk is established based on…

Answer 14

desired level of control risk

Question 15

lower control risk = ____ risk of over reliance

Answer 15

lower

Question 16

tolerable rate of deviation is based on…

Answer 16

desired level of control risk

Question 17

lower control risk = ____ tolerable rate of deviation

Answer 17

lower

Question 18

expected population deviation rate is estimated based on…

Answer 18

past audits

Question 19

risk of under reliance is a ____ loss

Answer 19

efficiency

Question 20

risk of over reliance is a ____ loss

Answer 20

effectiveness

Question 21

risk of overreliance is the risk of…

Answer 21

asses control risk too low (relying on controls when you shouldn’t be)

Question 22

risk of over reliance occurs when…

Answer 22

sample indicates controls are running effectively but they actually are not

Question 23

effective loss means…

Answer 23

do not reduce audit risk to a sufficient level

Question 24

risk of over reliance could result in…

Answer 24

difference of opinion

Question 25

risk of under reliance means...

Answer 25

not relying on controls when you should be

Question 26

risk of under reliance has us do ____ audit work than we need to

Answer 26

more

Question 27

does risk of undereliance change audit opinion?

Answer 27

NO

Question 28

risk of undue reliance Is the risk of...

Answer 28

assessing control risk too high

Question 29

risk of under reliance occurs when..

Answer 29

sample indicates controls are not functioning properly but they actually are

Question 30

an efficient loss is...

Answer 30

performing more effective substantial procedures than necessary

Question 31

unrestricted random selection is..

Answer 31

selecting items based on random numbers matched with a population

Question 32

systematic random selection is...

Answer 32

bypass a fixed number of items in the population, selecting each nth item

Question 33

block selection...

Answer 33

select contiguous units

Question 34

haphazard selection...

Answer 34

selects in a nonsystematic manner

Question 35

with statistical sampling, you can only use...

Answer 35

unrestricted random selection or systematic random selection

Question 36

sample rate of deviation =

Answer 36

number of deviations / sample size

Question 37

1 - risk of overeliance is the...

Answer 37

probability that the true rate of deviation is less than or equal to the URLD

Question 38

risk of over reliance is the...

Answer 38

probability that the true rate of deviation exceeds the URLD

Question 39

URLD consists of...

Answer 39

1. sample rate of deviation 2. allowance for sampling risk

Question 40

if URLD is less than or equal to TRD,

Answer 40

rely on controls as planned

Question 41

if URLD is greater than or equal to TRD,

Answer 41

reduce planned reliance on controls

Question 42

advantage of sequential sampling is that...

Answer 42

the sample may be more efficient than a fixed sampling plan

Question 43

discovery sampling is used when...

Answer 43

deviations occur at a very low rate, but are critical in nature

Question 44

with discovery sample, if one deviation is identified...

Answer 44

the audit team concludes that control is not operating effectively

Question 45

statistical sampling allows audit team to...

Answer 45

control exposure to sampling risk