Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
11th Edition
ISBN: 9781337734493
Author: JOHNSTONE, Karla M; Gramling, Audrey A.; Rittenberg, Larry E.
Publisher: Cengage Learning
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Question
Chapter 8, Problem 31CYBK
To determine
Introduction:A Tolerable misstatement is the amount which exist in the financial statements but the impact of it is so small that it will not affect the whole meaning of the entire Accounting results.
To choose: The minimum size of sample, which an auditor should see.
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S1: Mean per unit estimation is a classical variable sampling technique that projects the sample average to the total population by multiplying the sample average by the number of items in the population. S2: The more the auditor is relying on other substantive procedures to reduce to an acceptable level the detection risk regarding a particular population, the less assurance the auditor will require from sampling, and the smaller the sample size can be.
a. BOTH STATEMENTS ARE TRUE
b. BOTH STATEMENTS ARE FALSE
c. ONLY S1 IS TRUE
d. ONLY S2 IS TRUE
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
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?
Chapter 8 Solutions
Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
Ch. 8 - Prob. 1CYBKCh. 8 - Prob. 2CYBKCh. 8 - Prob. 3CYBKCh. 8 - Prob. 4CYBKCh. 8 - Prob. 5CYBKCh. 8 - Prob. 6CYBKCh. 8 - Prob. 7CYBKCh. 8 - Prob. 8CYBKCh. 8 - Prob. 9CYBKCh. 8 - Prob. 10CYBK
Ch. 8 - Prob. 11CYBKCh. 8 - Prob. 12CYBKCh. 8 - Prob. 13CYBKCh. 8 - Prob. 14CYBKCh. 8 - Prob. 15CYBKCh. 8 - Prob. 16CYBKCh. 8 - Prob. 17CYBKCh. 8 - Prob. 18CYBKCh. 8 - Refer to Exhibit 8.6. Assume a 5% risk of...Ch. 8 - Prob. 21CYBKCh. 8 - Prob. 22CYBKCh. 8 - Prob. 23CYBKCh. 8 - Prob. 24CYBKCh. 8 - Prob. 25CYBKCh. 8 - Prob. 26CYBKCh. 8 - Prob. 27CYBKCh. 8 - Prob. 28CYBKCh. 8 - Prob. 29CYBKCh. 8 - Prob. 30CYBKCh. 8 - Prob. 31CYBKCh. 8 - Prob. 32CYBKCh. 8 - Prob. 33CYBKCh. 8 - Prob. 34CYBKCh. 8 - Prob. 35CYBKCh. 8 - Prob. 36CYBKCh. 8 - Prob. 37CYBKCh. 8 - Prob. 38CYBKCh. 8 - Prob. 39CYBKCh. 8 - Prob. 1RQSCCh. 8 - Prob. 3RQSCCh. 8 - Prob. 4RQSCCh. 8 - Prob. 5RQSCCh. 8 - Prob. 6RQSCCh. 8 - Prob. 7RQSCCh. 8 - Prob. 8RQSCCh. 8 - Prob. 9RQSCCh. 8 - Prob. 10RQSCCh. 8 - Prob. 11RQSCCh. 8 - Prob. 12RQSCCh. 8 - Prob. 13RQSCCh. 8 - Prob. 14RQSCCh. 8 - Prob. 15RQSCCh. 8 - Prob. 16RQSCCh. 8 - Prob. 17RQSCCh. 8 - Prob. 18RQSCCh. 8 - Prob. 19RQSCCh. 8 - What is stratification? Distinguish between...Ch. 8 - Prob. 21RQSCCh. 8 - Prob. 22RQSCCh. 8 - Prob. 23RQSCCh. 8 - Prob. 24RQSCCh. 8 - Prob. 25RQSCCh. 8 - Prob. 26RQSCCh. 8 - Prob. 27RQSCCh. 8 - Prob. 28RQSCCh. 8 - Prob. 29RQSCCh. 8 - Prob. 30RQSCCh. 8 - Prob. 31RQSCCh. 8 - Prob. 32RQSCCh. 8 - Prob. 33RQSCCh. 8 - Prob. 36RQSCCh. 8 - Prob. 37RQSC
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- 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.arrow_forwardIf 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 misstatementarrow_forwardSample Size Determination. For each of the following independent cases, use AICPA sample size tables to identify the missing value(s). Control 1 2 3 4 Risk of overreliance 5.0% 5.0% 10.0% (d) Expected population deviation rate 1.25% 2.5% (c) 1.25% Tolerable rate of deviation 7.0% (b) 6.0% 6.0% Sample size (a) 68 153 78arrow_forward
- 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 errorarrow_forwardIf the _______ exceeds the _______, the audit team would decide to rely on internal control as planned and maintain control risk at planned levels.a. ULRD; tolerable rate of deviation.b. tolerable rate of deviation; ULRD.c. expected population deviation rate; tolerable rate of deviation.d. tolerable rate of deviation; expected population deviation rate.arrow_forwardUsing AICPA sample evaluation tables, determine the conclusion from a statistical sampleof internal controls when a sample of 125 documents indicates five deviations if the tolerablerate of deviation is 5 percent, the expected population deviation rate is 2 percent, and theallowance for sampling risk is 3 percent.a. Accept the evidence as support for assessing a low control risk because the tolerable rateof deviation less the allowance for sampling risk is less than the expected populationdeviation rate.b. Use the evidence to assess a higher control risk than planned because the sample rate ofdeviation plus the allowance for sampling risk exceeds the tolerable rate of deviation.c. Use the evidence to assess a higher control risk than planned because the tolerable rate ofdeviation plus the allowance for sampling risk exceeds the expected population deviationrate.d. Accept the evidence as support for assessing a low control risk because the sample rate ofdeviation plus the allowance for…arrow_forward
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