Nonsampling risk is the fact that the sample is not representative of the population.

1. Nonsampling risk is the fact that the sample is not representative of the population.
True
False

Question 2
1. Auditing sampling is:

the selection of a sample of items from a population so that the auditor expects the sample and evaluation to be representative of the population.

the selection and evaluation of a sample of items from an account so that the auditor expects the sample to be representative of the account.

the selection and evaluation of a sample of items from a population so that the auditor expects the sample to be representative of the population.

the selection and observation of a sample of items from a population so that the auditor expects the sample to be representative of the population.

Question 3
1. With nonstatistical sampling, sampling risk is controlled by

quantifying sampling risk to keep the risk to an acceptable number

quantifying control risk to keep the risk to an acceptable number

selecting smaller sample sizes

taking a random sample so the sample is representative of the population

evaluating sample results to consider control risk in the evaluation of the results
Question 4
1. The auditor should consider which of the following factors in selecting the correct sample size?

A. More testing will be required for manual controls than automated controls because manual controls are more prone to human error. IT controls that have been tested should continue to be reliable.


B. The more transactions in a system, the more items need to be tested.

C. The more assurance we receive from other audit procedures, the less the control is tested.


D. The less susceptible the control is to management override, the more the control is tested.

E. The more frequently a control is performed, the less items are tested. More internal control tests are performed for controls that are performed monthly than for controls performed daily.

F. both A and C


G. both B and D
Question 5
1. A control deviation occurs when

the control has been performed but not efficiently

there is no indication that the control has been performed

the control has been performed but not effectively

there is no indication that the control exists
Question 6
1. To determine the sample size for tests of controls, the auditor needs to estimate the following information based on his professional judgment

the relative rate of deviation for the population to be tested


the realizable rate of deviation for the population to be tested

the desired level of assurance that the actual rate of deviation is not exceeded by the tolerable rate of deviation

the number of sampling units in the population if the population is very small, less than 500
Question 7
1. Systematic random sampling can only be used when

internal controls are present

the sampling units are prenumbered


internal controls are operating

random sampling can be used under any circumstances
Question 8
1. If the sample deviation rate is lower than the tolerable deviation rate, the auditor will

A. reduce the amount of control testing

B. assume controls are not working

C. assume the controls are working

D. reduce the amount of substantive testing


E. increase the amount of substantive testing

F. both A and C

G. both C and D

Question 9
1. The auditor uses professional judgment to estimate

the risk of underreliance

the sample interval

the desired control risk

the expected deviation rate

the actual deviation rate

Question 10
1. The auditor uses sampling for substantive tests of balances and for substantive tests of transactions to determine

whether the financial statements accounts associated with the account balance or class of transactions are materially misstated

whether the financial statements are materially misstated

whether the balance sheet accounts associated with the account balance or class of transactions are materially misstated

whether the income statement accounts associated with the account balance or class of transactions are materially misstated
Question 11
1. The risk of incorrect acceptance of the account balance or class of transactinos is an error that affects

the efficiency of the audit

the effectiveness of the audit

the reliability of the audit

the relevance of the audit
Question 12
1. The auditor must define the sampling unit in a way that is

consistent with the assertion being tested

consistent with the account balance being tested

consistent with the transaction being tested

consistent with the population being tested
Question 13
1. Which of the following is a statistical audit sampling technique that the auditor may decide to use?

A. judgmental sampling

B. haphazard sampling

C. monetary unit sampling

D. classical variables sampling

E. non random number sampling

F. both A and C

G. both C and D
Question 14
1. The auditor makes the decision about whether the misstatements found in a substantive test of balances sample are material after

determining if the misstatements are within the tolerance level

determining if the misstatements are within the assurance level

extrapolating misstatements from the sample to the population

projecting misstatements from the sample to the population
Question 15
1. With monetary unit sampling

each individual interval in the population has an equal chance of being selected

each individual dollar in the population has an equal chance of being selected

each interval of dollars in the population has an equal chance of being selected

each dollar within the interval in the population has an equal chance of being selected
Question 16
1. Tolerable misstatement is

A. A matter of professional judgment

B. amount of misstatement, on the basis of the auditor's professional judgment, that should be present in the account balance or class of transactions

C. often stated as 50-75% of materiality level

D. the level of audit risk the auditor is willing to accept

E. both A and C


F. both B and E
Question 17
1. To obtain the likely misstatements for the account balance or class of transactions, auditors

divide the known misstatement by the likely misstatement

subtract the likely misstatement from the known misstatement

add the known misstatement to the likely misstatement

subtract the known misstatement from the likely misstatement

subtract the known misstatement from the projected misstatement
Question 18
1. Variables sampling is used to determine the accuracy of the recorded amount in the population from the evidence in a sample of the population.
True
False