Chapter 9 Homework Questions

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70 When an auditor does a sampling for attributes, which of the following would decrease sample size?      Risk of assessing control risk too low  Tolerable rate of Deviation  Expected population deviation rate  A.  Increase  Decrease  Increase  B.  Decrease  Increase  Decrease  C.  Increase  Increase  Decrease  D.  Increase  Increase  Increase          Group of answer choices  Choice C  Choice B  Choice A  Choice D

High levels of assurance mean _______.     A. lower levels of non-sampling risk that the sample is not representative of the population   B. higher levels of non-sampling risk that the sample is not representative of the population   C. lower levels of sampling risk that the sample is not representative of the population   D. higher levels of sampling risk that the sample is not representative of the population

.What is the effect on sample size for substantive procedures of an increase in the total error that the auditor is willing to accept     increase decrease negligible effect no effect

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? a. Smaller measure of tolerable misstatement. b. Greater reliance on internal control. c. Smaller expected frequency of errors. O d. Greater reliance on analytical procedures.

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(Appendix G.B) To determine the sample size for a classical variables sampling application,an audit team should consider the tolerable misstatement, risk of incorrect acceptance, riskof incorrect rejection, population size, population variability, anda. Expected misstatement in the account.b. Overall materiality for the financial statements taken as a whole.c. Risk of assessing control risk too low.d. Risk of assessing control risk too high

Tolerable error, is the maximum monetary error that the auditor is prepared to accept in the population and still conclude that audit objective has been achieved, is directly related to A.Sample size BAudit risk C.Materiality D.Expected error

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STATEMENT 1: In an audit sampling application, detection risk arises from the uncertainties of nonsampling risk and sampling risk. STATEMENT 2: Non sampling risk can be reduced to an acceptably low level by a 100% examination of the account balance or transaction class. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct

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The risk that the decision made based on the sample will differ from the decision madebased on the entire population is referred to asa. Audit risk.b. Examination risk.c. Sampling risk.d. Nonsampling risk

s1: The only way to know with certainty whether a sample Is representative is to subsequently audit the entire population. s2: One way to control sampling risk is to increase the sample size. s3: Sampling risk results from the auditor's failure to recognize exceptions in transaction data.  A. all statements are true b. all statements are false c. s1 and s2 are true d. s1 and s3 are true

What is the effect on sample size for test of controls of an increase in the auditor's intended reliance on accounting and internal control systems.     increase decrease negligible effect no effect

5. Selecting a sample of items from a data set so that the sample is representative of the population as a whole requires A Random selection of items; data privacy B Transparency of the sampling process; a sufficiently large sample size  C Random selection of items, a sufficiently large sample size Mansparency of the sampling process, data privacy   6. Frenchay plc sells two chemicals, XF1 and XF2. The company’s Finance Director has received a report confirming that whenever the price of XF1 is reduced, demand for XF2 decreases. The Finance Director can conclude that XF1 and XF2 are:   complementary goods   normal goods       substitute goods   inferior goods

s1: A stratified sample consist of sampling units selected without conscious bias. s2: All auditing procedures involve audit sampling. s3: A deviation from prescribed control procedures does not necessarily indicate the presence of monetary error  A. all statements are true b. all statements are false c. s1 and s2 are true d. s1 and s3 are true

Which one of the sentences below is FALSE? A. The risk of incorrect acceptance called beta risk has the consequence that the auditor may assume that the population is free of material misstatement. B. The risk of incorrect rejection is called alpha risk and has the consequence that the auditor may assume on the basis of sample results that a population is materially misstated when, in fact, it is not .  C. The risk of incorrect acceptance is called beta risk. D. The risk of incorrect rejection very common in audit sampling  is called beta risk.

37. A pie chart meets the ACCURATE criteria for good quality information because visualising the components of a data set in a pie chart is User-targeted Authoritative Timely Relevance   38. A consultant has made two statements about sampling: An entire set of data from which a sample can be selected for analysis a called a distribution Statistical methods can be applied to a representative sample in both exploratory and confirmatory data analysis Are these statement accurate? Only state 1 is accurate Only state 2 is accurate Both state are accurate Neither state is accurate

QUESTION 4 B. Using audit sampling, a subset of the population is selected for testing to derive generalisations about the population. Required: Determine FIVE (5) elements to be assessed during the sample selection.

STATEMENT 1: If the sampling unit is defined as the individual disbursement entry in the check register, the sampling frame would be the check voucher and its supporting documents. A STATEMENT 2: Not all audit tests applied to less than 100% of the populatian are considered audit sampling applications. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct

8 Audit Sampling is an investigative step or technique where less than 100% of the total items within the population of items are selected to be audited.   Question 8 options:   a) True   b) False

3. Sample results may not be truly representative of a population due to * A. Sampling risks B. Sampling error C. Nonsampling error D. Standard deviation E. All of them

Which of the following combinations results in an increase in sample size in an attribute sample? a.   Allowable Risk of Overreliance Tolerable  Rate  Expected Population Deviation Rate Decrease Decrease Increase   b.   Allowable Risk of Overreliance Tolerable  Rate  Expected Population Deviation Rate Decrease Increase Decrease   c.   Allowable Risk of Overreliance Tolerable  Rate  Expected Population Deviation Rate Increase Increase Decrease   d.   Allowable Risk of Overreliance Tolerable  Rate  Expected Population Deviation Rate Increase Increase Increase   e.   Allowable Risk of Overreliance Tolerable  Rate  Expected Population Deviation Rate Increase Decrease Increase

Which of the following statements is correct about monetary unit sampling?a. The risk of incorrect acceptance must be specified.b. Smaller logical units have a higher probability of selection in the sample than larger units.c. Each logical unit in the population has an equally likely chance of being selected in the sample.d. The projected misstatement cannot be calculated when one or more misstatements are discovered.