ACCT 543 Quiz 7

measure the sufficiency of the evidence gathered.

An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to: Eliminate nonsampling risk. reduce the level of audit risk and overall materiality to a relatively low level. measure the sufficiency of the evidence gathered. minimize the failure to detect misstatements and irregularities.

Define the deviation conditions.

As part of the assessment of control risk, the auditor decided to use audit sampling. After specifying the audit objectives, what would the auditor most likely do next? Determine the sample size. Select the sample. Perform tests of control procedures. Define the deviation conditions.

Inspecting employee time cards for proper approval by supervisors.

For which of the following audit tests would an auditor most likely use attributes sampling? Making an independent estimate of the amount of a LIFO inventory. Examining invoices in support of the valuation of fixed asset additions. Selecting accounts receivable for confirmation of account balances. Inspecting employee time cards for proper approval by supervisors.

shipping documents.

If the auditor were interested in ensuring that all sales have been recorded, the population would be defined as: entries in the cash receipts journal. entries in the general journal. remittance advices. shipping documents.

consider the sample item a deviation.

Mary Todd is auditing White House Furniture. In selecting a sample of purchases, she finds that a purchase order is missing. She should: select another purchase to test. have the client recreate the purchase order. consider the sample item a deviation. ask the client if the purchase was authorized.

risk of overreliance.

The auditor tested a sample of recorded sales invoices for evidence of credit approval. Based on the results of the sample, the auditor concluded that there was a satisfactory rate of approvals. Unknown to the auditor, credit approvals in the population were not satisfactory. This would be an example of: risk of overreliance. risk of underreliance. risk of incorrect acceptance. risk of incorrect rejection.

sampling risk.

The probability that an auditor's conclusion based on a sample might be different from the conclusion based on the entire population identifies the concept of: confidence levels. nonsampling risk. nonstatistical sampling. sampling risk.

Upper limit rate of deviation; tolerable rate of deviation.

When considering the results of an attributes sampling application, the auditor compares which of the following two measures? Upper limit rate of deviation; sample rate of deviation. Tolerable rate of deviation; sample rate of deviation. Expected rate of deviation; upper limit rate of deviation. Upper limit rate of deviation; tolerable rate of deviation.

Control risk.

Which of the following components of the audit risk model is most closely associated with attributes sampling? Audit risk. Control risk. Detection risk. Inherent risk.

Risk of overreliance.

Which of the following does not have a direct relationship with sample size? Expected population deviation rate. Population size. Risk of overreliance. All of these have a direct relationship with sample size.

Risk of overreliance, risk of incorrect acceptance.

Which of the following risks expose the auditor to effectiveness losses? Risk of underreliance, risk of incorrect acceptance. Risk of overreliance, risk of incorrect rejection. Risk of underreliance, risk of incorrect rejection. Risk of overreliance, risk of incorrect acceptance.

There is an inverse relationship between the sample size and the tolerable rate of deviation.

Which of the following statements is correct concerning statistical sampling in tests of controls? Deviations from control procedures at a given rate usually result in misstatements at a higher rate. As the population size doubles, the sample size should also double. The qualitative aspects of deviations are not considered by the auditor. There is an inverse relationship between the sample size and the tolerable rate of deviation.

Evaluate the sample results.

Which of the following steps in the sampling process is ordinarily performed last? Determine the objective of sampling. Measure sample items. Evaluate the sample results. Define the characteristic of interest.

Making a mistake in recording sample results.

Which of the following would typically result in nonsampling risk? Selecting a nonrepresentative sample. Making a mistake in recording sample results. Intentionally omitting several items in the population from examination. None of these result in nonsampling risk.