Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 29QRA
a.
To determine
Explain the advantages of applying statistical sampling techniques to audit testing.
b.
To determine
Explain the professional judgements required to be taken by the CPAs in applying statistical sampling techniques to tests of controls.
c.
To determine
Explain the desirable actions that should be taken by the auditor in case of higher deviation rate than the tolerable rate.
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In non-statistical sampling, _______.
the auditor determines samples size, sample selection methods, and evaluates the sample results on the basis of the professional judgment and the auditor’s own experience.
the auditor determines samples size, sample selection methods, and evaluates the sample results entirely on the basis of predetermined statistical parameters.
the auditor uses the internal audit function to gather samples
the auditor selects a sample of certain balance sheet accounts and exclusively audits them
If an auditor wishes to draw attention to important information that is already presented or disclosed in the financial statements, the auditor would include a _______.
qualified opinion
disclaimer of opinion
emphasis-of-matter paragraph
scope limitation paragraph
_______ are used near the end of the audit to assist the auditor in forming an overall conclusion about whether the financial statements…
Attribute sampling enables the auditor to directly assess whether a rule is operating successfully or not, sampling is more reliable for assessing controls. This is crucial in circumstances where data accuracy or completeness are essential, such as when a credit-check control is used for consumer orders. The focus is on estimating the overall monetary value of a population, therefore monetary-unit sampling is more suitable for verifying the accuracy of financial statements or specific account balances. It is crucial to remember that the exact audit objectives and the type of data being checked will determine the sampling technique that is used. Do you believe monteray unit sampling can do the same thing?
Risk of incorrect rejection is defined as _______.
the risk that the auditor concludes that a material misstatement does not exist when it does exist
the risk that the auditor concludes that a material misstatement exists when it does not exist
the risk that an auditor incorrectly rejects a client
the risk that management may reject the audit opinion issued by the auditor
An advantage of statistical sampling _______.
is that it allows an auditor to measure control risk
is that it allows an auditor to measure sampling risk
is that it allows an auditor to measure inherent risk
is that it is cheaper to perform, resulting in lower audit fees for the client
Chapter 9 Solutions
Connect Access Card for Principles of Auditing & Other Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - What is a dual-purpose test?Ch. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - What would be the difference between an attributes...Ch. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25RQCh. 9 - Prob. 26RQCh. 9 - Prob. 27RQCh. 9 - Prob. 28RQCh. 9 - Prob. 29QRACh. 9 - Prob. 30QRACh. 9 - Prob. 31QRACh. 9 - Prob. 32QRACh. 9 - Prob. 33QRACh. 9 - Prob. 34QRACh. 9 - Prob. 35QRACh. 9 - Prob. 36QRACh. 9 - Prob. 37AOQCh. 9 - Prob. 37BOQCh. 9 - Prob. 37COQCh. 9 - Prob. 37DOQCh. 9 - Prob. 37EOQCh. 9 - Prob. 37FOQCh. 9 - Prob. 37GOQCh. 9 - Prob. 37HOQCh. 9 - Prob. 37IOQCh. 9 - Prob. 37JOQCh. 9 - Prob. 37KOQCh. 9 - Prob. 37LOQCh. 9 - Prob. 38OQCh. 9 - Prob. 39OQCh. 9 - For each term in the first column below, identify...Ch. 9 - Prob. 41OQCh. 9 - Smith, Inc. Rachel Robertson wishes to use...Ch. 9 - Prob. 43OQCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Prob. 47PCh. 9 - In the audit of Potomac Mills, the auditors wish...Ch. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - Prob. 51PCh. 9 - Prob. 52ITC
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Similar questions
- 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.arrow_forwardYou and a friend are studying audit sampling together. Your friend is having a hard time understanding the various aspects of risk associated with attribute sampling and has put together the following list of questions she wants to discuss with you. Answer each question. a. What is:■Audit risk?■Inherent risk?■Control risk?■Controllable risk?■Residual risk? b. What is sampling risk? How is sampling risk controlled? c. What are the two aspects of sampling risk that an internal auditor is concerned with when testing controls? Briefly describe each aspect. d. What is nonsampling risk? How is nonsampling risk controlled?arrow_forwardThe International Standard on Auditing (UK) (ISA (UK)) 530, “applies when the auditor has decided to use audit sampling in performing audit procedures. It deals with the auditor’s use of statistical and non-statistical sampling when designing and selecting the audit sample, performing tests of controls and tests of details, and evaluating the results from the sample.”Required:(a) Define and explain sampling risk (b) State and explain five methods of sample selection and how they function (c) If an auditor wishes to include high-value items in their sample, which of the sample selection methods identified in part (b) would they use? (d) State five scenarios where sampling may not be appropriate.arrow_forward
- If the auditor concludes that audit sampling has not provided a reasonable basis for conclusions about the population that has been tested, the auditor may practically apply which of the following: i) Request management to investigate misstatements that have been identified and the potential for further misstatements ii) Request management to investigate misstatements that have been identified and to make any necessary adjustments iii) Make another completely new audit sampling for test of details iv) Tailor the nature, timing and extent of further audit procedures to best achieve the required assurance. A. i) , ii ) and iii) B. i ) and iii) C. iii) and iv) D. i, ii and ivarrow_forwardWhich 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 samplingarrow_forwardAttribute Sampling and Monetary-Unit Sampling are two sampling techniques designed to help an auditor test controls. Discuss how each are different and provide an example of how you would decide which one to use if you were auditing a company’s credit-check control for customer orders. Defend which technique, in your opinion, is more reliable. Provide examples to support your opinion.arrow_forward
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