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
Q: Monetary Unit Sampling Misstatement Factors for Sample Evaluation TABLE 9-3 90% Desired Confidence…
A: Monetary unit sampling (MUS) It is a method of sampling that determines if there is any misstatement…
Q: General Attributes Sampling. You overheard the following dialogue between Joe Ashley(a staff…
A: Hello, since your question has multiple sub parts we will solve the first three questions for you.…
Q: 2. Which of the following is not true about the advantages of statistical sampling approach? * A.…
A: Correct option is B. Sample findings are evaluated in a more scientific way. Explanation:
Q: You and a friend are studying audit sampling together. Your friend is having a hard time…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Jerry Tim is examining an important internal control in the audit of Langly Company. Inpast audits,…
A: Sampling: Sampling allows an individual obtain the information about the population of interest in…
Q: The unique feature of monetary unit sampling is thata. Sampling units are not chosen at random.b. A…
A:
Q: According to ISA 530, Auditing sampling reference to the application of audit procedure: Less than…
A: Audit Sampling: Auditor verify selected items and provide opinion on the entire population of items…
Q: Sample Size and Sampling Interval Determination: Monetary Unit Sampling. BlytheDrake is conducting…
A: Definition:
Q: Sample Size and Sampling Interval Determination: Monetary Unit Sampling. CaseyPaul is considering…
A: Hey, since there are multiple requirements posted, we will answer first three requirements. If you…
Q: Assume that an account with a recorded balance of $5,000 has an audited value of $3,000. By using…
A: Projected misstatement: It can be defined as the difference between the audited value and the…
Q: s1: The only way to know with certainty whether a sample Is representative is to subsequently audit…
A: Option (c) is the correct answer i.e. s1 and s2 are true
Q: A. What would Plane’s conclusion be with respect to the operating effectiveness of the control? What…
A: Financial accounting: Financial accounting is the process of recording, summarizing, and reporting…
Q: STATEMENT 1: In an audit sampling application, detection risk arises from the uncertainties of…
A: Audit sampling is a process or procedure in which a sample of items are selected from the total…
Q: Auditors must be aware of sampling risks because: A The risk of type 2 error due to increased…
A: The Type 2 error is failing to detect a material misstatement in the financial statements. Type 1…
Q: Explain
A: In Statistical sampling, there are equal chances of selection of each sampling unit whereas in…
Q: The type of sampling most frequently used by auditors during their study of internal control is…
A:
Q: Jerry Tim is examining an important internal control in the audit of Langly Company. Inpast audits,…
A: Sampling: Sampling allows an individual obtain the information about the population of interest in…
Q: Sample Size Determination. Jule Phillips is examining the internal control of CowboyCompany and has…
A: a. Note .Refer to sample size table
Q: STATEMENT 1: All auditing procedures involves audit sampling. STATEMENT 2: Sufficiency or adequacy…
A: Answer: Concept: Audit sampling is done in audit so that maximum testing are covered.
Q: Sample Size Determination. For each of the following independent cases, use AICPA sample size tables…
A: The determination of sample size states the act for choosing the observations number which is…
Q: If the result from a sample survey do not represent the results obtained from Census survey, it is…
A: Sampling Error A sampling error is a one of the type of statistical error where the error occurs…
Q: Select the necessary words from the list of possibilities to complete the following statements. 1. 2…
A: Since you have posted a question with multiple sub-parts, we will do the first three for you. To get…
Q: High levels of assurance mean _______. A. lower levels of non-sampling risk that the sample is…
A: High Level of Assurance: The greater the degree of assurance offered, the greater the amount of…
Q: Assume that you have selected a random sample of 15 checks from a population of 800 checks. The…
A: Audit sampling is the audit procedure which is applied to items less than 100% in the category…
Q: Monetary Unit Sampling. Georgie Costanza, CPA, is auditing the accounts receivable of Vandalay…
A: a) Monetary Unit Sampling is one of the two statistical approaches for variable sampling. If C is…
Q: aterial misstatement exists when it does not exist the risk that an auditor incorrectly…
A: Risk of incorrect rejection is defined as the risk that the auditor concludes that a…
Q: d consider whendetermining the size of a sample. (d) Describe to what extent statistical sampling…
A: Auditing: It is the examination of books of accounts of the company with the view to represent a…
Q: When an auditor does a sampling for attributes, which of the following would decrease sample size?…
A: Risk of assessing control risk means that internal controls will not able to prevent or detect the…
Q: Comprehensive Attributes Sampling. Audra Dodge, CPA, is performing an attributessampling plan for…
A:
Q: Mistakes in a Monetary Unit Sampling Application. Kelsey Mead, CPA, was engaged toaudit Jiffy…
A: The process of recording, summarizing, and reporting all transactions in a company's financial…
Q: Evaluating Sample Results: Nonstatistical Sampling. Finley Gunny is using nonstatistical sampling in…
A: Classical variable sampling: It is a sampling method in which each record is considered as a…
Q: Which of the following would not result in the audit team’s selecting a larger sample of controlsfor…
A: Sampling: Sampling allows an individual to obtain information about the population of interest in…
Q: 17-Selection of items for testing to obtain audit evidence without following a structured technique…
A: Introduction:- "Sampling" may be defined as a smaller set of data that a researcher chooses or…
Q: Evaluating a Sampling Application. Tom Barton, an assistant accountant with a local CPAfirm,…
A:
Q: For each population, did the auditor select a smaller sample size than is indicated by using the…
A: As per the guidelines we can can provide the solution for 3 sub part only. To get the answer of…
Q: TRUE OR FALSE When evaluating the results of specific items selected for testing, its effects must…
A: Hi student Since there are multiple questions, we will answer only first question.
Q: Sample Results Evaluation. Jamie Plane is testing the effectiveness of an important controlfor…
A: a.
Q: s1: A stratified sample consist of sampling units selected without conscious bias. s2: All auditing…
A: Ans. While doing audit an auditor divides a whole population in small samples. These samples are…
Q: Sample Size and Sampling Interval Determination: Monetary Unit Sampling. Reagan Simmons is…
A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…
Q: If the auditor concludes that audit sampling has not provided a reasonable basis for conclusions…
A: Audit sampling is an investigative technique in which a sample of fewer than 100% of the total items…
Q: In an MUS sample with a sampling interval of $5,000, an auditor discovered that aselected accounts…
A: Given: Sampling interval = $ 5,000 Amount recorded on accounts receivable = $ 10,000 Audit value = $…
Q: Complete the statement. The lower the risk of material misstatement, a. the greater the…
A: The risk of material misstatement represents the risk of misleading statements involved in the…
Q: STATEMENT 1: Nonstatistical sampling approach is determined based on pure judgment of the auditor.…
A: Audit refers to the physical examination or investigation of the book of accounts of the company and…
Q: If the sample evidence does not support the planned level of control risk, the audit team coulda.…
A: Auditing is done in order to determine that the financial statements are not materially misstated.
Q: Jamie Plane is testing the effectiveness of an important control for Blackheart Inc. Plane is…
A:
Q: STATEMENT 1: Since audit sampling is an essential part of the audit process, each step in an audit…
A: Auditing means the independent checking of company operation by outsider. Auditor is a qualified and…
Q: State with reasons (in short) whether the following statements are correct or incorrect (a) The…
A: As per our protocol we provide solution to the first three sub-parts only in case of multiple…
Step by step
Solved in 2 steps
- d. Assume that based on additional controls implemented by ELM, your audit team has decided to reduce the expected misstatement from $77,928 to $19,482 (0.5 percent of the recorded balance of the transactions). What is the necessary sample size, holding all other factors constant?Audit sampling involves applying an audit procedure to less than 100 percent of the population for the purpose of evaluating some characteristic of the population. when an auditor uses sampling, an element of uncertainty enters into the auditor’s conclusions.Required:a. Explain the auditor’s justification for accepting the uncertainties that are inherent in the sampling process.b. Discuss the uncertainties that collectively embody the concept of audit risk.c. Discuss the nature of sampling risk and nonsampling risk. Include the effect of sampling risk on tests of controls.In audit sampling applications, sampling risk isa. A characteristic of statistical sampling applications but not of nonstatistical applications.b. The probability that the audit team will fail to recognize erroneous accounting in the client’sdocumentation.c. The probability that accounting misstatements will arise in transactions and enter theaccounting system.d. The probability that an audit team’s conclusion based on a sample might be differentfrom the conclusion based on an audit of the entire population.
- Which of the following statements is false? A) Top-stratum items are population items whose book value likely exceed the Sampling Interval and would be all selected for examination and evaluation during the audit. B) Because the auditor knows the full amount of errors in the top stratum (since all items are evaluated), no estimate of errors or projection to the population for the errors in the top stratum is required. C) The auditor's evaluation of the most likely misstatements in the sample reflects the sum of the misstatements from the top-stratum and the projected misstatement derived from the each lower-stratum items D) None of the aboveAn auditor who uses statistical sampling for attributes in testing internal controlsshould reduce the planned reliance on a prescribed control when the(1) sample exception rate plus the allowance for sampling risk equals the tolerable rate.(2) sample exception rate is less than the expected rate of exception used inplanning the sample.(3) tolerable rate less the allowance for sampling risk exceeds the sample exceptionrate.(4) sample exception rate plus the allowance for sampling risk exceeds the tolerablerate.Audit sampling involves applying an audit procedure to less than 100 percent of the population for the purpose of evaluating some characteristic of the population. The fact that an audit involves sampling is noted in the scope paragraph of the auditor’s report, which contains the phrase “An audit includes examining, on a test basis.” When an auditor uses sampling, an element of uncertainty enters into the auditor’s conclusions.Required:a. Explain the auditor’s justification for accepting the uncertainties that are inherent in the sampling process.b. Discuss the uncertainties that collectively embody the concept of audit risk.c. Discuss the nature of sampling risk and nonsampling risk. Include the effect of sampling risk on tests of controls.
- Which of the following statements is not true with respect to the calculation of the upperlimit on misstatements?a. The tainting percentage is determined based on the difference between the recorded balance and the audited value.b. A separate incremental allowance for sampling risk is calculated for each misstatementdiscovered by the auditor.c. If no misstatements are detected, the basic allowance for sampling risk equals zero.d. The projected misstatement is determined by multiplying the sampling interval by thetainting percentage.TRUE OR FALSE When evaluating the results of specific items selected for testing, its effects must be projected to the whole population. Audit sampling refers to the application of audit procedures to less than 100% of the items in account balance or class of transactions for the purpose of evaluating some of its characteristics. In performing external confirmations, the management prepares the requests and receives and replies for communication to the auditor. One of the ways to gain knowledge of any lirigations and claims is through an examination of professional or legal expenses and related source documents. Related parties generally unreliable in nature which leads to the auditor performing procedures to examine transactions with them.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.
- If the UML or Projected Misstatement in a sampling is $8,000, while the tolerable misstatement is $9,000, what would an auditor likely conclude? A) Since the UML or Projected Misstatement is less than the tolerable misstatement, the account is not materially misstated. B) Since the UML or Projected Misstatement is less than the tolerable misstatement, the account is misstated. C) The analysis has been improperly performed since the UML or Projected Misstatement is unequal to the tolerable misstatementWhich of the following is an advantage of nonstatistical sampling?a. It measures the audit team’s exposure to sampling risk.b. It is required by generally accepted auditing standards.c. It ensures that samples are randomly selected.d. It is typically less complex than statistical samplingIn an audit sampling application, an auditora. Performs procedures on all items in a balance and makes a conclusion about the entirebalance.b. Performs procedures on less than 100 percent of the items in a balance and formulates aconclusion about the entire balance.c. Performs procedures on less than 100 percent of the items in a class of transactions tobecome familiar with the client’s accounting system.d. Performs analytical procedures on the client’s unaudited financial statements when planning the audit.