CH9 AUDIT SAMPLING

b. Audit sampling

This involves the application of the procedures to less than 100% of the items within an account balance or class of transactions. This enables the auditor to obtain and evaluate audit evidence about some characteristics of the selected items in order to from an opinion about the characteristics of all the items supporting an account balance or transaction class

a. Audit techniques

b. Audit sampling

c. Selective testing

d. Specific identification

a. Yes Yes Yes

When designing audit procedures, the audit should determine the appropriate means of selecting items for testing. The means available to the auditor would include:

I. 100% examination

II. Audit sampling

III. Selecting specific items

a. Yes Yes Yes

b. No Yes No

c. No Yes Yes

d. No No Yes

d. Applying audit procedures to less than 100% of items within an account balance or class of transactions such that all sampling units have a chance of selection.

Which of the following constitutes audit sampling?

a. Selecting and examining specific items to determine whether or not a particular procedure is being performed.

b. Examining items to obtain information about matters such as the client's business, the nature of transactions, accounting and internal control systems.

c. Examining items whose values exceed a certain amount so as to verify a large proportion of the total amount of an account balance or class of transactions.

d. Applying audit procedures to less than 100% of items within an account balance or class of transactions such that all sampling units have a chance of selection.

a. Account balance being audited is fairly stated

The auditors principal objective when using a sample of test of details of balances is whether the:

a. Account balance being audited is fairly stated

b. Transactions being audited are free of misstatement

c. Controls being tested are operating effectively

d. Transactions and account balances being audited are fairly stated.

d. Test of details are performed

Audit sampling for substantive tests is appropriate when

a. Analytical procedures are used

b. The auditor wants to eliminate sampling risk

c. A population contains small number of large value items

d. Test of details are performed

a. Review sales transactions for large and unusual amounts

For which of the following audit procedures is audit sampling inappropriate?

a. Review sales transactions for large and unusual amounts

b. Examine a sample of duplicate sales invoices for credit approval.

c. Compare the quantity on duplicate sales invoices with the quantity on related shipping documents.

d. Audit sampling is appropriate for each of the above procedures.

a. Control leaves evidences of performance

Audit sampling for test of control is generally appropriate when

a. Control leaves evidences of performance

b. Control leaves no evidences of performance

c. 100% of transactions is tested

d. Examining specific high value items in the population

c. Sampling risk

The possibility that the auditor's conclusion based on a sample may be different from the conclusion reached if the entire population were subjected to the same procedure is called

a. Audit risk

b. Non-sampling risk

c. Sampling risk

d. Detection risk

a. A randomly chosen sample may not be representative of the population as a whole on the characteristics of interest

Which of the following best illustrates the concept of sampling risk

a. A randomly chosen sample may not be representative of the population as a whole on the characteristics of interest

b. An auditor may select audit procedures that are not appropriate to achieve the specific objective.

c. An auditor may fail to recognize errors in the documents examined for chosen sample

d. The documents related to the chosen sample may not be available for inspection

a. Increase the sample size

One of the ways to reduce sampling risk is to

a. Increase the sample size

b. Carefully design the audit procedures to be used

c. Provide proper supervision and instruction of the audit team

d. Use variables sampling rather than attribute sampling

c. Sample

Non-sampling errors occur when the audit tests do not uncover exist exceptions in the

a. Population

b. Planning stage

c. Sample

d. Financial statement

c. The use of inappropriate of ineffective audit procedures

One of the causes of non-sampling error is

a. Failure to draw a random sample

b. Failure to draw a representative sample

c. The use of inappropriate of ineffective audit procedures

d. The use if attributes sampling instead of variables sampling

b. Proper supervision and instruction of audit team

One of the ways to control non-sampling risk is through

a. Proper supervision and instruction of the client's employees

b. Proper supervision and instruction of audit team

c. The use of attributes sampling rather than variables sampling

d. Control which ensure that the sample drawn is random and representative

b. Non-sampling risk

Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?

a. Sampling risk

b. Non-sampling risk

c. Audit risk

d. Detection risk

a. Ineffective use of audit procedures

One cause of nonsampling risk is

a. Ineffective use of audit procedures

b. Testing less than the entire population

c. Use of extensive tests of controls

d. All of the above

a. Increasing the sample size

Sampling risk may be controlled by

a. Increasing the sample size

b. Adequate supervision of audit personnel

c. Both A and B

d. Neither A nor B

d. The use of inappropriate audit procedures is a significant cause of non-sampling risk

Which of the following statements is most correct?

a. A sample of all items of a population will eliminate sampling risk, but increase non-sampling risk

b. The use of an appropriate sample selection technique ensures a representative sample

c. The auditor's failure to recognize an exception is a significant cause of sampling risk

d. The use of inappropriate audit procedures is a significant cause of non-sampling risk

d. Use an appropriate method of selecting sample items from the population

One of the ways to reduce sampling risk is to

a. Carefully design the audit procedures to be used

b. Use variables sampling rather than attributes sampling

c. Provide proper supervision and instruction of the audit team

d. Use an appropriate method of selecting sample items from the population

a. Efficiency of the audit

In assessing sample risk, alpha risks relate to the

a. Efficiency of the audit

b. Selection of the sample

c. Effectiveness of the audit

d. Audit quality controls

b. The beta error is of greater concern to the auditor than the alpha error

In performing substantive tests, the auditor is concerned with two risks or errors of sampling; the alpha error and the beta error.

a. The alpha error is of greater concern to the auditor than the beta error

b. The beta error is of greater concern to the auditor than the alpha error

c. The beta error and the alpha error are of equal importance to the auditor

d. Neither the alpha error nor the beta error need be considered by the auditor

c. audit the entire population.

To determine if a sample is truly representative of the population, an auditor would be required to:

a. conduct multiple samples of the same population.

b. never use sampling because of the expense involved.

c. audit the entire population.

d. use systematic sample selection.

a. Perform expanded audit tests in the relevant areas

While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. Which of the following is the least likely auditor reaction to this discovery?

a. Perform expanded audit tests in the relevant areas

b. Increase detection risk in the relevant areas

c. Increase the sample size for test of control

d. Take no action until tests of other audit areas are completed

c. Effectiveness of the audit

In assessing sample risk, beta risks relate to the

a. Efficiency of the audit

b. Selection of the sample

c. Effectiveness of the audit

d. Audit quality controls

c. Lower

The acceptable risk of assessing control risk too low will normally be assessed at a __________ level when auditing a public company.

a. Higher

b. Compensating

c. Lower

d. Nominal

c. 4, 3, 5, 2, 1

What is the proper order of steps for the following activities?

1. Analyze exceptions

2. Select the sample

3. Design audit procedure

4. State the objectives of the audit test

5. Determine the appropriate sample size

a. 1, 3, 2, 4, 5

b. 4, 3, 1, 2, 5

c. 4, 3, 5, 2, 1

d. 1, 2, 3, 4, 5

b. Statistical and nonstatistical

PSA 530 identifies two general approaches to audit sampling they are

a. Random and nonrandom

b. Statistical and nonstatistical

c. Precision and reliability

d. Risk and nonrisk

d. Audit procedures on the sample item will not vary as a result of using either statistical or nonstatistical sampling

Which of the following statements best expresses the impact that the performance of audit procedures has on statistical and nonstatistical sampling?

a. Audit procedures on the sample item will vary as a result of using either statistical or nonstatistical sampling.

b. The audit procedures will be the same for either statistical or nonstatistical sampling but they must be performed differently for each.

c. Statistical sampling requires quantitative audit procedures, whereas nonstatistical sampling requires judgmental audit procedures

d. Audit procedures on the sample item will not vary as a result of using either statistical or nonstatistical sampling

a. Applies mathematical rules that allows auditors to quantify sampling risk

Which of the following is not true for non-statistical sampling?

a. Applies mathematical rules that allows auditors to quantify sampling risk

b. May use statistical selection techniques

c. Reaches conclusion about the population on a judgmental sample

d. Does not allow measurement of sample reliability

a. Statistical selection

When the auditor intends to evaluate a sample statistically, the only acceptable selection method is

a. Statistical selection

b. Judgmental selection

c. Haphazard selection

d. Block sample selection

d. Sample size

A principle advantage of statistical methods of attributes sampling over non statistical methods is that they provide a scientific basis for planning the:

a. Risk of assessing control risk too low

b. Tolerable exception rate

c. Excepted population exception rate

d. Sample size

a. Mathematically measures risk

An advantage of using statistical sampling is that such technique

a. Mathematically measures risk

b. Eliminate the need for judgmental decision

c. Define the value of reliability necessary to provide audit assurance

d. Have been established in the courts to be superior to non-statistical sampling

c. Sampling risk can be quantified only when statistical selection techniques are used to select the sample

Which of the following statements is most correct about the quantification of sampling risk?

a. Sampling risk cannot be qualified

b. Sampling risk can be quantified only when non-statistical selection techniques are used to select the sample

c. Sampling risk can be quantified only when statistical selection techniques are used to select the sample

d. None of the above

c. Replacement of the auditor's professional judgement

Statistical samples do not allow

a. More sufficient samples

b. Measurement of sample reliability

c. Replacement of the auditor's professional judgement

d. Measurement of sample risk

c. Assure sample will be representative of a population

Statistical sampling cannot

a. Determine reliability of samples

b. Select a sample to draw inference about a population

c. Assure sample will be representative of a population

d. Measure the risk that a sample is not representative of a population

d. Sample size

A principle advantage of statistical methods of attributes sampling over non statistical methods is that they provide a scientific basis for establishing the:

a. Risk of assessing control risk too low

b. Tolerable exception rate

c. Excepted population exception rate

d. Sample size

a. Provide a mathematical measurement of uncertainty.

Auditors who prefers statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its unique ability to

a. Provide a mathematical measurement of uncertainty.

b. Promote a more legally defensible procedural approach.

c. Define the precision required to provide audit satisfaction

d. Have been established in the courts to be superior to judgmental sampling

c. Sampling risk can be quantified only when statistical selection techniques are used to select the sample

Which of the following statements is most correct about the quantification of sampling risk?

a. Sampling risk cannot be qualified

b. Sampling risk can be quantified only when non-statistical selection techniques are used to select the sample

c. Sampling risk can be quantified only when statistical selection techniques are used to select the sample

d. None of the above

d. The same audit procedures are performed in the same manner for either statistical or nonstatistical sampling.

Which of the following statements is true ?

a. The audit procedures will vary as a result of using either statistical or nonstatistical sampling

b. The audit procedures will be the same for either statistical or nonstatistical sampling, but they must be performed differently for each

c. Statistical sampling requires quantitative audit procedures, whereas nonstatistical sampling requires judgmental audit procedures.

d. The same audit procedures are performed in the same manner for either statistical or nonstatistical sampling.

a. Attributes sampling

A statistical method used to estimate the proportion of items in population containing a characteristics of interest is

a. Attributes sampling

b. Variables sampling

c. Estimation sampling

d. Population -proportional-to-size sampling

d. Sampling of variables

Which of the following sampling plans would be designed to estimate a numerical measurement of a population such as peso value?

a. Numerical sampling

b. Sampling of attributes

c. Discovery sampling

d. Sampling of variables

a. Attributes

Which of the following sampling methods would be most appropriate in performing tests of controls over authorization of cash disbursement

a. Attributes

b. Variables

c. Ratio

d. Stratified

b. Variables and attributes

There are many kinds of statistical estimates that an auditors may find useful, but basically every accounting estimate is either of a quantity or of an error rate. The statistical terms that roughly correspond to "quantities" and "error rate" respectively, are:

a. Attributes and variables

b. Variables and attributes

c. Constants and attributes

d. Constants and variables

b. Attributes sampling

Which of the following is not a type of statistical method that provides results in peso terms?

a. Variables sampling

b. Attributes sampling

c. Monetary unit sampling

d. Sampling with probability proportional to size

d. Attributes sampling

Oscar CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6% .In auditing client invoices Oscar should use

a. Stratified sampling

b. Classical sampling

c. Proportional sampling

d. Attributes sampling

c. Examine a sample of duplicate sales invoice for credit approval by the credit managers

Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

a. Review sales transactions for large and unreasonable amounts

b. Observe whether the duties of the accounts receivable clerk are separate from handling cash

c. Examine a sample of duplicate sales invoice for credit approval by the credit managers

d. Review the aged schedule pf accounts receivable to determine if receivables from officers are included

c. Examine a sample of duplicate sales invoice for credit approval by the credit managers

Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

a. Review sales transactions for large and unreasonable amounts

b. Observe whether the duties of the accounts receivable clerk are separate from handling cash

c. Examine a sample of duplicate sales invoice for credit approval by the credit managers

d. Review the aged schedule pf accounts receivable to determine if receivables from officers are included

d. Auditors are concerned with all of these exceptions

Auditors are concerned with which type of exceptions in populations of accounting data when performing test of control?

a. Deviations from clients established controls

b. Monetary misstatements in transaction data

c. Monetary misstatements in account balance details

d. Auditors are concerned with all of these exceptions

c. Pesos

Sampling used for tests of details of balances provides results in terms of:

a. Deviation rates

b. Percentages

c. Pesos

d. Expectations rates

b. Sampling for attributes

If an auditor, planning to use statistical. Sampling, is concerned with the number of a client's sales invoices that contain mathematical errors, the auditor would most likely utilize which sampling technique?

a. Random sampling with replacement

b. Sampling for attributes

c. Sampling for variables

d. Stratified random sampling

a. Population

In a sampling application, the group of items about which the auditor wants to estimate some characteristics is called the

a. Population

b. Sample

c. Attribute of interest

d. Sampling unit

c. The number of exceptions in the sample divided by the sample size.

The sample exception rate equals

a. The number of exceptions in the population divided by the sample size.

b. The number of items in the population multiplied by the number of exceptions in the sample

c. The number of exceptions in the sample divided by the sample size.

d. The number of exceptions in the population divided by the population size.

a. tolerable deviation rate

The deviation rate the auditor will permit in the population and still be willing to reduce the assessed level of control risk is called the

a. tolerable deviation rate

b. estimated population deviation rate

c. acceptable sampling risk

d. sample deviation rate

b. tolerable error

The maximum amount of error in a population that the auditor is willing to accept is referred to as the

a. acceptable risk

b. tolerable error

c. expected error

d. tolerable materiality

d. expected deviation rate

The deviation rate the auditor expects to find in the population, before testing begins, is called the

a. tolerable deviation rate

b. sample deviation rate

c. computed upper deviation rate

d. expected deviation rate

d. Tolerable deviation rate

Which of the following must be set prior to testing a sample:

a. Sample deviation rate.

b. Achieved upper precision limit.

c. Computed deviation rate.

d. Tolerable deviation rate

b. higher than the expected rate of deviation.

The tolerable rate of deviations for tests of controls is generally:

a. lower than the expected rate of deviation.

b. higher than the expected rate of deviation.

c. identical to the expected rate of deviation.

d. unrelated to the expected rate of deviation.

a. Population size

Which of the following factors is generally not considered in determining sample size for a test of controls?

a. Population size

b. Tolerable rate

c. Risk of assessing control ask too low

d. Expected population deviation rate

c. Acceptable risk of assessing control risk too low

The risk which the auditor is willing to take accepting a control as being effective when it id not is the

a. Finite correction factor

b. Tolerable exception rate

c. Acceptable risk of assessing control risk too low

d. Estimates population exception rate

c. Not performed

If the auditor decides to assess control risk at the maximum level, tests of controls are

a. Increased in number

b. Reduced in number

c. Not performed

d. Unchanged from prior planned settings

b. Inverse

The relationship between sample size and the allowable sampling risk is

a. Direct

b. Inverse

c. Variable

d. Indeterminate

a. is reduced

If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance:

a. is reduced

b. is increased

c. is not changed.

d. may be reduced or increased depending upon other circumstances.

b. the extent of reliance to be placed on the procedures

The tolerable rate of deviation for tests of controls necessary to justify a control risk assessment depends primarily on which of the following?

a. the cause of errors

b. the extent of reliance to be placed on the procedures

c. the amount of any substantive errors

d. the limit used in audits of similar clients

d. Smaller measure of tolerable misstatements

A number of factors influence 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. Assessing control risk at a low level

b. Greater reliance on analytical procedures

c. Smaller expected frequency of misstatements

d. Smaller measure of tolerable misstatements

b. acceptable risk of incorrect rejection

Which of the following does not have to be considered in determining the initial sample size of a test of details?

a. tolerable misstatement

b. acceptable risk of incorrect rejection

c. estimate of misstatements in the population

d. acceptable audit risk

c. Decrease Increase

How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details?

I. Increase in tolerable misstatement

II. Increase in assessed level of control risk

a. Increase Increase

b. Increase Decrease

c. Decrease Increase

d. Decrease Decrease

b. higher than the estimated population deviation rate in the related accounting records

The tolerable rate of deviations for tests of controls is generally:

a. lower than the estimated population deviation rate in the related accounting records

b. higher than the estimated population deviation rate in the related accounting records

c. identical to the estimated population deviation rate in the related accounting records

d. unrelated to the estimated population deviation rate in the related accounting records

c. Increase Increase Decrease

Which of the following combinations results in a decrease in sample size for attributes?

I. Acceptable sampling risk

II. Tolerable deviation rate

III. Expected population deviation rate

a. Increase Decrease Increase

b. Decrease Increase Decrease

c. Increase Increase Decrease

d. Increase Increase Increase

d. Population size.

Which of the following would have the least impact in determining sample size for tests of controls?

a. Expected population exception rate.

b. Risk of assessing control risk too low.

c. Tolerable exception rate.

d. Population size.

a. Tolerable deviation rate

In determining the sample size for a test of controls, an auditor should consider the expected rate of deviations, the allowable sampling risk, and the

a. Tolerable deviation rate

b. Risk of incorrect acceptance

c. Nature and cause of deviations

d. Population size

b. increase

As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:

a. decrease.

b. increase

c. vary based on characteristics of the population.

d. be unaffected.

a. The population size has little or no effect on determining sample size except for very small populations.

Which of the following statements is correct concerning statistical sampling in tests of controls?

a. The population size has little or no effect on determining sample size except for very small populations.

b. The expected population deviation rate has little or no effect on determining sample size except for very small populations.

c. As the population size doubles, the sample size also should double.

d. For a given tolerable rate, a larger sample size should be selected as the expected population deviation rate decreases.

a. increased

If acceptable audit risk is increased, acceptable risk of in acceptance should be:

a. increased

b. decrease

c. Not be affected

d. Either increase or decrease

c. Deviation occurrence rate the auditor expects to find in the population

To determine an optimum sample size when sampling methods are used in a substantive test, all of the following factors must be considered except the

a. Variance in the population

b. Risk levels the auditor is willing to accept

c. Deviation occurrence rate the auditor expects to find in the population

d. Tolerable misstatement

b. increase the desired confidence level and decrease the tolerable deviation rate

Which of the following results in a larger sample size?

a. decrease the desired confidence level and decrease the tolerable deviation rate

b. increase the desired confidence level and decrease the tolerable deviation rate

c. decrease the desired confidence level and increase the tolerable deviation rate

d. increase the desired confidence level and increase the tolerable deviation rate

a. The auditor is willing to take

The acceptable risk of assessing control risk too low is a measure of the level of risk that

a. The auditor is willing to take

b. Is predicted by the random number table

c. Is predicted by the statistical frequency table

d. Is generated as a result of the auditor's knowledge of the true population exception rate.

c. Inverse

The acceptable risk of assessing control risk too low has a significant effect on sample size. The relationship this acceptable risk and the sample size is

a. Variable

b. Direct

c. Inverse

d. Nonexistent

a. Direct

In attributes sampling, an advance estimate of the estimated population exception rate is necessary to plan the appropriate sample size. The relationship between the expected population deviation rate and the sample size is

a. Direct

b. Inverse

c. Dependent on other factors present

d. Indeterminate

b. A minor consideration in determining sample size

Statistical theory proves that in most types of populations to which attributes sampling applies, the population size is

a. Not a consideration in determining sample size

b. A minor consideration in determining sample size

c. A major consideration in determining sample size

d. The determining factor in establishing sample size

b. Desired reliability decreases

When using statistical sampling, the auditor would probably require a smaller if the

a. Population increases

b. Desired reliability decreases

c. Desired precision interval narrows

d. Expected exception rate increases

d. Statistical

Principal methods of sampling selection include all of the following except

a. Haphazard

b. Random number

c. Systematic

d. Statistical

b. random sample

A sample in which every possible combination of items population has a chance of constituting the sample is a

a. representative sample

b. random sample

c. statistical sample

d. judgment sample

b. deciding the number of digits to use in the random number table and their association with the population numbering system.

Correspondence is established between the random number table and the population by:

a. identifying each item in the population with a unique number.

b. deciding the number of digits to use in the random number table and their association with the population numbering system.

c. defining which digits the auditor uses in a column and the method of reading the table.

d. selecting a random starting point on the table.

a. systematic sample selection.

When auditors wish to evaluate a sample statistically, an acceptable selection method is:

a. systematic sample selection.

b. judgmental selection.

c. haphazard selection.

d. block sample selection.

b. It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used.

Which of the following statements regarding block sampling is least likely to be true?

a. Block sampling is the selection of several items in sequence.

b. It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks is used.

c. Only one block should be selected to increase the probability of a representative sample.

d. Once the first item in the block is selected, the remainder of the block is chosen automatically.

b. systematic selection

The process which requires the calculation of an interval and then selects the items based on the size of the interval is

a. statistical sampling

b. systematic selection

c. random selection

d. computerized selection

a. Sampling interval

In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the:

a. Sampling interval

b. Tolerable deviation rate

c. Computed upper deviation rate

d. Mean

a. It is easy to use

The advantage of systematic sample selection is that

a. It is easy to use

b. There is limited possibility of it being biased

c. It is unnecessary to determine if the population is arranged randomly

d. All three of the above

b. Use a random number table

A means of reducing the potential bias in systematic sample selection is to

a. Use multiple starts

b. Use a random number table

c. Include a large block of the population

d. Include only the high-dollar-value items

b. Haphazard selection

When the auditor goes through a population and selects items for the sample without regard to their size, source, or other distinguishing characteristics, it is called

a. Block sample selection

b. Haphazard selection

c. Systematic sample selection

d. Statistic selection

d. Do not have to be prenumbered in order for the auditor to use the technique

In examining cash disbursements, an auditor plans to choose a sample using systematic selection with a random start. The primary advantage of such a systematic selection is that population items

a. That include irregularities will not be overlooked when the auditor exercises compatible reciprocal options

b. May occur in a systematic pattern, thus making the sample more representative

c. May occur more than once in a sample

d. Do not have to be prenumbered in order for the auditor to use the technique

b. Representative sample

A sample in which the characteristics of the sample are the same as those of the population is a(n)

a. Variables sample

b. Representative sample

c. Attributes sample

d. Random sample

b. Stratified sampling

A method of sampling in which all the items in the population are divided into two or more sub-population is

a. Variable sampling

b. Stratified sampling

c. Attribute sampling

d. Divisible sampling

b. The population has highly variable recorded amounts

In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if

a. Value-weighted sampling is used

b. The population has highly variable recorded amounts

c. The auditor's estimated tolerable misstatement is extremely small

d. The standard deviation of recorded amounts is relatively small

c. To decrease the effect of variance in the total population

What is the primary objective of using stratification as a sampling method is auditing?

a. To increase the confidence level at which a decision will be reached from the results of the sample selected

b. To determine the occurrence rate for a given characteristics in the population being studied

c. To decrease the effect of variance in the total population

d. To determine the precision range of the sample selected

c. Either A or B

which of the following can be used when using random number selection?

a. Use of random number tables

b. Use computer generated random numbers

c. Either A or B

d. Neither A nor B

b. Block selection

which of the following statistical selection techniques is least desirable for use by an auditor?

a. Systematic selection

b. Block selection

c. Stratified selection

d. Sequential selection

c. May occur in a systematic pattern, thus negating the randomness of the sample

In performing a review of his client's cash disbursements, a CPA uses a systematic sample selection with a random start. The primary disadvantage of systematic sample selection is that population items

a. May occur twice in the sample

b. Must be reordered in a systematic pattern before the sample can be drawn

c. May occur in a systematic pattern, thus negating the randomness of the sample

d. Must be replaced in the population after sampling to permit value statistical inference.

c. Has been properly voided

An auditor is testing internal control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher

a. Constitutes a deviation

b. Cannot be located

c. Has been properly voided

d. Represents an immaterial peso amount

c. Treat the missing purchase order as a deviation for the purpose of evaluating the sample

An auditor plan to examine a sample of 20 purchase orders for proper approvals as prescribed by the client's control procedures. One of the purchase orders in chosen sample of 20 cannot be found, and the auditor is unable to use alternative procedures to test whether that purchase order was properly approved. The auditor should

a. Choose another purchase order to replace the missing purchase order in the sample

b. Consider this test of control invalid and proceed with substantive test since internal control cannot be relied upon.

c. Treat the missing purchase order as a deviation for the purpose of evaluating the sample

d. Select a completely new set of 20 purchase orders

b. Modify planned reliance on the control because the sample exception rate plus the allowance for sampling risk exceeds the tolerable rate.

What is an auditor's evaluation of a statistical sample for attributes when a test of 100 documents results in 4 deviations if the tolerable exception rate is 5 °/•, the expected population deviation rate is 3°/•, and the allowance for sampling risk is 2°/•?

a. Accept the sample results as support for planned reliance on the control because the tolerable rate less the allowance for sampling risk equals the expected population exception rate

b. Modify planned reliance on the control because the sample exception rate plus the allowance for sampling risk exceeds the tolerable rate.

c. Modify planned reliance on the control because the tolerable rate plus the allowance for sampling risk exceeds the expected population exception rate.

d. Accept the sample results as support for planned reliance on the control because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate.