Sampling

Question 1

An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to…

Answer 1

1) measure the sufficiency of the audit evidence obtained

2) provide an objective basis for quantitatively evaluating sample risk

Question 2

Before considering the aggregate effect of identified uncorrected misstatements, the auditor should consider each misstatement separately to evaluate…

Answer 2

(a) its effect in relation to individual classes of transactions, account balances, or disclosures, including whether the materiality level for the financial statements taken as a whole has been exceeded
(b) whether, in considering the effect of the individual misstatements on the financial statements taken as a whole, it is appropriate to offset misstatements
(c) the effect of the misstatements related to prior periods.

Question 3

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…

Answer 3

Incorrect acceptance

Question 4

In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if:

Answer 4

the population has highly variable recorded amounts.

Question 5

The allowance for sampling risk is calculated as

Answer 5

the upper precision limit - the sample deviation rate

Question 6

What type of sampling procedure is used to measure the continuously variable dollar amounts of the sample, which provide the quantitative estimates required for substantive testing.

Answer 6

Variables sampling

Question 7

What type of sampling is the procedure used in tests of controls to detect the presence (or absence) of a documented control procedure.

Answer 7

Attributes sampling

Question 8

T/F

Stop-or-go and random number sampling are sampling methods. These methods can be used with either variables or attribute sampling.

Answer 8

TRUE

Question 9

What two sampling methods are used in the substantive testing of account balances and details of transactions?

Answer 9

Stratified and variable sampling

Question 10

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

Answer 10

Ratio Estimation

Question 11

_______ sampling is based on relationships between audited amounts and recorded amounts. This approach is most efficient when the relationship is not equal to one.

Answer 11

Ratio Estimation

Question 12

Ratio estimation is most appropriate when…

Answer 12

testing a population for which a large number of errors is expected

Question 13

Unstratified mean-per-unit will typically provide a ____ (larger/smaller) sample size than ratio estimation to achieve _____ (the same/more) level of sampling risk

Answer 13

Larger

Same

Question 14

_____ is most efficient for testing populations with relatively low expected error rates

Answer 14

Probability Proportional to Size

Question 15

____ is most frequently used in attribute sampling

Answer 15

Stop & Go, also known as Sequential sampling