ch 9 - quiz audit

The sample size for a substantive test of details of an account balance is affected by a number of factors. Assuming all other information remains constant, which of the following would lead to a smaller sample size?

An increase in the amount of tolerable misstatement.

Which of the following sampling methods would be used to estimate a numeric measurement of a population, such as a monetary value?

Variable sampling.

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?

Smaller amount of tolerable misstatement.

The risk of incorrect acceptance relates to the

Effectiveness of the audit.

An auditor may decide to decrease the desired level of confidence when

The planned evidence required from a particular test of detail is reduced because of the strength of evidence provided by an improved substantive analytical procedure.

Which of the following relationships is correct?

Tolerable misstatement and sample size are inversely related.

Which of the following statements concerning the auditor’s use of statistical sampling is correct?

An auditor needs to estimate the monetary amount of the standard deviation of the population in order to use classical variables sampling.

In classical variables sampling, which of the following must be known in order to estimate the appropriate sample size required to meet the auditor’s needs in a given situation?

The acceptable level of risk.

Which of the following statements concerning monetary-unit sampling is correct?

The auditor controls the risk of incorrect acceptance by specifying the desired confidence level for the sampling plan.

An auditor is performing substantive procedures of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past experience indicates that there may be numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate?

Classical variables sampling.

When determining the sample size for MUS application, the auditor must determine all of the following except:

The estimated standard deviation.

Monetary-unit-sampling [MUS] is less efficient and generally not used if

The auditor’s objective is oriented towards understatements.

Which of the following would most likely be an advantage in using classical variables sampling rather than monetary-unit sampling?

Inclusion of zero and negative balances generally does not require special design considerations.

An auditor would conclude that an account balance is not fairly stated if the __________________ is less than the __________________.

tolerable misstatement; upper misstatement limit.

An auditor plans to use a monetary-unit sampling plan with a systematic sample selection on an account balance of €1,000,000. There are over 50 items that make up the account balance, ten of which are individually over €50,000. To ensure that all accounts with balances of at least €50,000 are selected, the minimum sample size should be

20

In a probability-proportional-to-size sample with a sampling interval of €15,000, an auditor discovered that a selected inventory item with a recorded amount of €5,000 had an audited amount of €3,500. If this were the only misstatement discovered by the auditor, the projected misstatement of this sample would be

4,500

Which of the following statements is true regarding audit sampling?

Audit firms are increasingly utilizing non-statistical sampling plans using their own proprietary software.

Using the following information and ratio projection, what is the best estimate of the misstatement in the account?

€75,000.

Which of the following represents the reason(s) that statistical sampling has fallen out of favour?

Both (1) the auditors were over-relying on statistical sampling techniques and (2) there is poor linkage between the applied audit setting and traditional statistical sampling applications.

In applying classical variables sampling, an auditor will generally evaluate sample results by calculating the possible error in either direction of a projected misstatement (or point estimate). This statistical concept is known as

Precision [or confidence interval].

Which of the following is considered one of the main advantages of classical variables sampling over monetary-unit sampling?

Inclusion of zero and negative balances generally do not require special sampling considerations.

An auditor is determining the sample size for an inventory observation using difference estimation [classical variables sampling]. To calculate the required sample size, the auditor usually determines the

Yes Yes

Using classical variables sampling, the projected population misstatement is €40,000 and the confidence bound is €2,400. What amount will be compared to tolerable misstatement to determine whether the account is fairly stated?

€42,400.