Audit Sampling: 33-48, 58 – Flashcards

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

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

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 assessing control risk too low (99% confidence) that not more than 7% of the sales invoices lacked approval. The auditor estimated from previous experience that about 2 1/ 2% 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 achieved upper precision limit to be 8%. 35. In the evaluation of this sample, the auditor decided to increase the level of the preliminary assessment of control risk because the

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 assessing control risk too low (99% confidence) that not more than 7% of the sales invoices lacked approval. The auditor estimated from previous experience that about 2 1/ 2% 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 achieved upper precision limit to be 8%. 36. The allowance for sampling risk was

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

38. When an auditor has chosen a random sample and is using nonstatistical attributes sampling, that auditor

39. How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details?

40. 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 disbursements?

41. Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

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

43. A number of factors influences 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?

44. In 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?

45. An auditor established a $ 60,000 tolerable misstatement for an asset with an account balance of $ 1,000,000. The auditor selected a sample of every twentieth item from the population that represented the asset account balance and discovered overstatements of $ 3,700 and understatements of $ 200. Under these circumstances, the auditor most likely would conclude that

46. Which of the following statements is correct concerning probability-proportional-to-size (PPS) sampling, also known as dollar unit sampling?

47. Hill has decided to use probability-proportional-to-size (PPS) sampling, sometimes called dollar-unit sampling, in the audit of a client's accounts receivable balances. Hill plans to use the following PPS sampling table: What sample size should Hill use?

48. In a probability-proportional-to-size sample with a sampling interval of $ 5,000, an auditor discovered that a selected account receivable with a recorded amount of $ 10,000 had an audit amount of $ 8,000. If this were the only error discovered by the auditor, the projected error of this sample would be

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