QUIZ 2 REV5 - MIDTERM

Several risks are inherent in the evaluation of audit evidence which has been obtained through the use of statistical sampling. Which of the following risks is an example of the risk of underassessment of control risk?

• Failure to properly define the population to be sampled.

• Failure to draw a random sample from the population.

• Failure to accept the statistical hypothesis that internal control is unreliable when, in

  fact, it is.

• Failure to accept the statistical hypothesis that a book value is not materially misstated when the true book value is not materially misstated.

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

• Numerical sampling.

• Discovery sampling.

• Sampling for attributes.

• Sampling for variables.

As a result of tests of controls, an auditor underassessed control risk and decreased substantive testing. This underassessment occurred because the true occurrence rate in the population was

• Less than the risk of underassessment in the auditor's sample.

• Less than the occurrence rate in the auditor's sample.

• More than the risk of under assessment in the auditor's sample.

• More than the occurrence rate in the auditor's sample.

Which of the following statements is an advantage of classical variables sampling?

• If no errors are expected, classical variables sampling will result in a smaller sample size than probability-proportional-to-size sampling.

• A classical variables sampling plan can begin before the completed population is available.

• Classical variables sampling may result in a smaller sample size than probability-proportional-to-size sampling if there are many differences between recorded and audited amounts.

• Classical variables sampling does not require recorded values for individual sampling units.

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

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

• To determine the occurrence rate for a given characteristic in the population being studied.

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

• To determine the precision range of the sample selected.

An auditor is applying PPS sampling. In determining the sample size, which of the following is not necessary?

• a reliability factor for overstatement errors

• are liability factor for understatement errors

• tolerable error

• anticipated error

In a variable sampling plan, an auditor must generally consider each of the following except

• variation within the population.

• acceptable risk of incorrect acceptance.

• tolerable error.

• population.

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

• variation in the population.

• risk levels that the auditor is willing to accept.

• deviation occurrence rate that the auditor expects to exist in the sample.

• tolerable misstatement.

PPS sampling is most appropriate when the auditor

• anticipates understatement errors.

• anticipates overstatement errors.

• expects no errors.

• has assessed control risk at the maximum.

The mean-per-unit estimation method calculates the estimated total audited value of a population of accounts receivable as

• A summation of the total individual accounts values in the population.

• The sample mean audited value multiplied by the number of items in the population.

• The estimated total audited value of the population multiplied by the number of items in the sample.

• The summation of the sample multiplied by the number of discrete samples in the population.