CHAP 15

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. Answer: B. representative sample
When the auditor decides to select less than 100 percent of the population for testing, the
auditor is said to use:
A) audit sampling.
B) representative sampling.
C) poor judgment.
D) estimation sampling. Answer: A. audit sample
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. Answer: C. audit the entire population
One of the causes of nonsampling risk is:
A) improper supervision and instruction of the client's employees.
B) ineffective audit procedures.
C) inadequate sample size.
D) exceptions being found in the sample. Answer: B. ineffective audit procedures
Which one of the choices below is most correct regarding a cause of sampling risk?
A) Ineffective use of audit procedures
B) Testing less than the entire population
C) Use of extensive tests of controls
D) The use of random sampling Answer: B. testing less than the entire population
An auditor can increase the likelihood that a sample is representative by using care in:
Designing the sampling process___
designing the sampling selection___ Answer: A.
YES. YES.
Which of the following is the risk that audit tests will not uncover existing exceptions in a
sample?
A) Sampling risk
B) Nonsampling risk
C) Audit risk
D) Detection risk Answer: B. nonsampling risk
Which of the following is the risk that an auditor will reach an incorrect conclusion
because a
sample is not representative of the population?
A) Sampling risk
B) Nonsampling risk
C) Audit risk
D) Detection risk Answer: A. sampling risk
Sampling risk may be controlled by:
adjusting the sample size____
using an appropriate method of selecting sample items ______ Answer: A.
YES . YES
Which of the following statements is most correct?
A) A sample of all items of a population will eliminate sampling risk, but increase
nonsampling 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 nonsampling risk.
Answer: D. the use of inappropriate audit procedures is a significant cause of
nonsampling risk
Sampling risk results from the auditor's failure to recognize exceptions in transaction
data.
A) True
B) False Answer: B. false
If an auditor does a test in the wrong direction, sampling risk will increase.
A) True
B) False Answer: B. false
If a particular internal control is not followed by the client exactly 6% of the time, and the
auditor's tests of that control find three control violations in a sample of 50, the sample is
considered to be representative.
A) True
B) False Answer: A. true
In practice, auditors do not know whether a sample is representative, even after all testing
is complete
A) True
B) False Answer: A. true
One way to control sampling risk is to increase sample size.
A) True
B) False Answer: A. true
A sample of all items in a population will have a zero sampling risk.
A) True
B) False Answer: A. true
It is virtually impossible to reduce sampling risk to zero.
A) True
B) False Answer: A. true
There are three phases in both statistical and nonstatistical sampling. The first phase is to:
A) generate random numbers for the sample.
B) evaluate the results.
C) plan the sample.
D) select the sample. Answer: C. plan the sample
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. Answer: A. systematic sample selection
Which of the following statements is most correct with concerning the quantification of
sampling risk?
A) Sampling risk cannot be quantified.
B) Sampling risk can be quantified only when nonprobabilistic selection techniques are
used to select the sample.
C) Sampling risk can be quantified only when probabilistic selection techniques are used
to select the sample.
D) None of the above. Answer: C. sampling risk can be quantified only when
probabilistic selection techniques are used to select the sample
Which of the following statements is most correct with respect to the evaluation of
nonprobabilistic sample results?
A) It is acceptable to make nonprobabilistic evaluations only when probabilistic sample
selection is used.
B) It is acceptable to make nonprobabilistic evaluations only if the auditor cannot
quantify sampling risk.
C) It is never acceptable to evaluate a nonprobabilistic sample using statistical methods.
D) All of the above are correct. Answer: C. it is never acceptable to evaluate a
nonprobabilistic sample using statistical methods.
Which of the following statements is a valid criticism of nonstatistical sampling?
A) Many audit tests, such as footing of journals, must be performed outside a statistical
sampling context.
B) The cost of performing random selection or testing often exceeds the benefits.
C) Nonstatistical sampling does not differ substantially from statistical sampling
methods.
D) Conclusions may be drawn in more precise ways when using statistical sampling
methods. Answer: D. conclusions may be drawn in more precise ways when using
statistical sampling methods
Which of the following statements is not correct regarding probabilistic and
nonprobabilistic sample selection?
A) In probabilistic selection, every population item has a known chance of being
selected.
B) It is acceptable to evaluate a nonprobabilistic sample using statistical methods.
C) Probabilistic selection is required for all statistical sampling methods.
D) Both methods are acceptable and commonly used. Answer: B. it is acceptable to
evaluate a nonprobabilistic sample using statistical methods
Nonprobabilistic selection methods are not based on mathematical probabilities;
therefore:
A) the extent to which a sample is representative of the population may be difficult to
determine.
B) they are discouraged by the AICPA.
C) they are not allowed by the Statements on Auditing Standards.
D) they are not as effective as statistical sampling. Answer: A. the extent to which
a sample is representative of the population may be difficult to determine
An advantage of using statistical sampling techniques is that such techniques:
A) mathematically measure risk.
B) eliminate the need for judgmental decisions.
C) define the values of precision and reliability required to provide audit satisfaction.
D) have been established in the courts to be superior to judgmental sampling.
Answer: A. mathematically measure risk
Auditors who prefer statistical to nonstatistical sampling believe that the principal
advantage of statistical sampling flows from its ability to:
A) quantify sampling risk.
B) promote a more legally defensible procedural approach.
C) define the precision required to provide audit satisfaction.
D) establish conclusive audit evidence with decreased audit effort. Answer: A.
quantify sampling risk
Which of the following statements best expresses the impact that the performance of
audit procedures has on statistical vs. 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. Answer: D. audit procedures on the sample item will not
vary as a result of using either statistical or nonstatistical sampling
It is equally acceptable under professional auditing standards for auditors to use either
statistical or nonstatistical sampling methods.
A) True
B) False Answer: A. true
When using nonstatistical sampling, the sample must be a probabilistic one.
A) True
B) False Answer: B. false
The use of haphazard sample selection is encouraged under professional auditing
standards.
A) True
B) False Answer: B. false
Directed sample selection, block sample selection, and haphazard sample selection are
three types of probabilistic sample selection methods.
A) True
B) False Answer: B. false
A sample in which every possible combination of items in the population has an equal
chance of constituting the sample is a:
A) random sample.
B) statistical sample.
C) judgment sample.
D) representative sample. Answer: A. random sample
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) random sample selection.
C) systematic sample selection.
D) computerized sample selection. Answer: C. systematic sample selection
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 exception rate.
C) computed upper exceptions rate.
D) mean. Answer: A. sampling interval
Which of the following methods of sample selection is appropriately used when selecting
a random sample?
Auditor's judgmental selection of items______
Use of random number generators_____
generalized audit software_______ Answer: B. NO. YES. YES.
Simple random sampling:
A) is used when there is a need to emphasize one or more types of population items.
B) requires both input and output parameters to be set when using a random number
generator.
C) is generally used with replacement sampling.
D) is a probabilistic sampling method. Answer: D. is a probabilistic sampling
method
When a population is divided into subpopulations, usually by dollar size, and larger
samples are taken from the subpopulation with the larger sizes, ________ is being used.
A) sampling with probability proportional to size
B) stratified sampling
C) block sampling
D) haphazard sampling Answer: B. stratified sampling
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) it automatically selects items material to the financial statements. Answer: A. it
is easy to use
In performing a review of a client's cash disbursements, an auditor uses systematic
sample selection with a random start. The primary disadvantage of this technique is
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 valid statistical inference.
Answer: C. may occur in a systematic pattern, thus negating the randomness of the
sample
Which of the following is a correct statement regarding block sampling?
A) It is acceptable to use block sampling only if a reasonable number of blocks are used.
B) Block sampling uses sampling with replacement.
C) Block sampling is a probabilistic sampling method.
D) There is considerable cost and time involved when block sampling is used.
Answer: A. it is acceptable to use block sampling only if a reasonable number of blocks
are used
The most serious shortcoming of the haphazard sample selection method is:
A) it is not subject to statistical sampling methods.
B) it is time consuming to use.
C) it is costly to use.
D) it is difficult to remain completely unbiased in the selection. Answer: D. it is
difficult to remain completely unbiased in the selection
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. Answer: C. only one block should be selected to increase the
probability of a representative sample
When the auditor goes through a population and selects items using nonprobabilistic
selection methods, 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) statistical selection. Answer: B. haphazard selection
When selecting a sample, random numbers may be obtained either with replacement or
without replacement. Although both selection methods are theoretically sound, auditors
rarely use replacement sampling.
A) True
B) False Answer: A. true
Although systematic sample selection is easy to use, its primary disadvantage is that it is
not a probabilistic sampling method.
A) True
B) False Answer: B. false
Nonprobabilistic sampling methods are not based on mathematical probabilities and
therefore the representativeness of the sample may be difficult to determine.
A) True
B) False Answer: A. true
Which of the following occurrences would be least likely to warrant further audit
attention for the auditor?
A) Deviations from client's established control procedures
B) Deviations from client's budgeted values
C) Monetary misstatements in populations of transaction data
D) Monetary misstatements in populations of account balance details Answer: B.
deviations from client's budgeted values
Which of the following statements is correct when dealing with sampling for exception
rates?
A) The term exception refers to both deviations from the client's control procedures and
amounts that are not monetarily correct.
B) When used with sampling, the term deviation is synonymous with the term exception.
C) The actual population exception rate is the same as the sample exception rate.
D) In using audit sampling for exception rates, the auditor is most concerned with the
confidence interval. Answer: A. the term exception refers to both deviations from
the client's control procedures and amounts that are not monetarily correct.
In using audit sampling for exception rates:
A) the auditor wants to know the most the exception rate is likely to be.
B) sampling error is the likelihood that the auditor will miss a monetary misstatement.
C) the upper limit of the interval estimate is known as the sampling risk.
D) CUER cannot be considered in the context of specific audit objectives. Answer:
A. the auditor wants to know the most the exception rate is likely to be
Which of the following is most correct when using audit sampling for exception rates?
A) Auditor is concerned with the lowest rate.
B) Auditor is concerned with the highest rate.
C) Auditor is concerned with the average on previous audits.
D) This doesn't impact the auditor's decision. Answer: B. auditor is concerned with
the highest rate
The highest estimated exception rate in the population at a particular acceptable risk of
assessing control risk too low is:
A) the upper exception rate.
B) estimated population exception rate.
C) the computed upper exception rate.
D) the tolerable exception rate. Answer: C. the computed upper exception rate
You are determining the significance of the following: you set a 5% risk of assessing
control risk to low and your computation of the upper deviation risk is 7%. What could
you conclude?
A) There is a 95% chance the deviation rate is the population is less than 5%.
B) There is a 5% chance the deviation rate in the population is less than 7%.
C) There is a 95% chance the deviation rate in the population exceeds 95%.
D) There is a 5% chance the deviation rate in the population exceeds 7%. Answer:
D. there is a 5% chance the deviation rate in the population exceeds 7%
If the auditor concludes that the CUER is 5% at a 8% sampling risk, this means that the
exception rate in the population is no greater than 5% with an 8% risk of the exception
rate exceeding 5%.
A) True
B) False Answer: A. true
The upper limit of the interval estimate is also known as the confidence interval.
A) True
B) False Answer: B. false
The risk which the auditor is willing to take in accepting a control as being effective
when the true population exception rate is greater than a tolerable rate is the:
A) finite correction factor.
B) tolerable exception rate.
C) acceptable risk of overreliance.
D) estimated population exception rate. Answer: C. acceptable risk of overreliance
The exception 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 exception rate.
B) estimated population exception rate.
C) acceptable risk of overreliance.
D) sample exception rate. Answer: A. tolerable exception rate
If the auditor decides to assess control risk at the moderate level in a private company
audit, when in previous years the auditor set control risk at the maximum level, then tests
of controls for the current year would be:
A) increased in number.
B) reduced in number.
C) not performed.
D) unchanged from prior planned settings. Answer: A. increased in number
When the computed upper exception rate is greater than the tolerable exception rate, it is
necessary for the auditor to take specific action. Which of the following courses of action
would be most difficult to justify?
A) Reduce the tolerable exception rate so as to accept the sample results.
B) Expand the sample size and perform more tests.
C) Revise the assessed control risk.
D) Write a letter to management which outlines the control deficiencies. Answer:
A. reduce the tolerable exception rate so as to accept the sample results
Which of the following would have the least impact in determining sample size?
A) Acceptable risk of overreliance
B) Risk of assessing control risk too low
C) Tolerable exception rate
D) Population size Answer: D. population size
Which of the following represents the best description of the tolerable exception?
A) The highest exception rate the auditor will permit in the control being tested and still
conclude it is operating effectively
B) The highest exception rate the auditor expects to find in the population
C) The number of exceptions found in the sample divided by the sample size
D) The highest estimated exception rate in a population at a given EPER Answer:
A. the highest exception rate the auditor will permit in the control being tested and still
conclude it is operating effectively
When analyzing exceptions, the auditor should keep in mind that:
A) all exceptions must be reported to management.
B) they should determine the breakdown in the internal controls that allowed the
exceptions to occur.
C) the nature of an exception and its causes have no effect on the qualitative evaluation of
the system.
D) exceptions do not need to be analyzed if it is too costly. Answer: B. they should
determine the breakdown in the internal controls that allowed the exceptions to occur
The exception rate that the auditor will permit in the population and still be willing to use
the preliminary control risk assessment is called the:
A) acceptable exception rate.
B) estimated population exception rate.
C) sample exception rate.
D) tolerable exception rate. Answer: D. tolerable exception rate
Auditors often use the ________ to determine the estimated population exception rate.
A) current year's audit results
B) tolerable exception rate
C) preceeding year's audit results
D) estimated computed by management Answer: A. current year's audit results
Place the following steps in their proper order:
1. Analyze exceptions
2. Select the sample
3. Define attributes and exception conditions
4. State the objectives of the audit test
5. Specify the tolerable exception rate
A) 1, 3, 2, 4, 5.
B) 4, 3, 1, 2, 5.
C) 4, 3, 5, 2, 1.
D) 1, 2, 3, 4, 5. Answer: C. 4, 3, 5, 2, 1
If an auditor judgmentally selects a sample of one hundred items from a population and
finds two exceptions, the auditor:
A) can conclude that the sample exception rate is 2%.
B) can conclude that the population exception rate is 2%.
C) can calculate the highest exception rate expected in the population.
D) cannot make any conclusions about either the sample or the population. Answer:
A. can conclude that the sample exception rate is 2%
In testing controls, an overreliance on internal controls that reduces substantive tests and
increases the likelihood of not detecting a material misstatement occurs because:
A) true deviation in the population was less than the sample.
B) true deviation in the population was greater than the sample.
C) auditor judgment was flawed.
D) it is inherent in the audit risk model. Answer: B. true deviation in the population
was greater than the sample
Which of the following is the exception rate that the auditor expects to find before
testing?
A) Sample exception rate
B) Estimated population exception rate
C) Computed exception rate
D) Tolerable exception rate Answer: B. estimated population exception rate
Which of the following is not a term related to evaluating results in audit sampling until
after a sample is tested and evaluated?
A) Sample exception rate
B) Estimated population exception rate
C) Computed upper exception rate
D) Exception Answer: B. estimated population exception rate
The relationship of tolerable exception rate (TER) to sample size is:
A) direct (larger TER = larger sample).
B) inverse (larger TER = smaller sample).
C) variable (sometimes larger, sometimes smaller).
D) not determinable. Answer: B. inverse (larger TER = smaller sample)
Which of the following must be set prior to testing a sample?
A) Sample exception rate
B) Achieved upper precision limit
C) Computed exception rate
D) Tolerable exception rate Answer: D. tolerable exception rate
The acceptable risk of overreliance:
A) is the risk that the auditor will erroneously conclude that the controls are less effective
than they actually are.
B) is less of a concern to the auditors than the risk of underreliance.
C) represents the auditor's measure of sampling risk.
D) is determined by a statistical formula, and not by professional judgment.
Answer: C. represents the auditor's measure of sampling risk
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.
Answer: C. the number of exceptions in the sample divided by the sample size
When defining the population:
A) it may be necessary to define separate populations for different audit procedures.
B) the auditor may generalize only about the population that has been sampled.
C) auditors can define the population to include any items they want.
D) all of the above. Answer: D. all of the above
One way to evaluate sampling risk when nonstatistical sampling is used is to:
A) subtract the sample exception rate from the tolerable exception rate.
B) add the sample exception rate and the tolerable exception rate.
C) subtract the sample exception rate from the acceptable risk of overreliance.
D) add the sample exception rate and the acceptable risk of overreliance. Answer:
A. subtract the sample exception rate from the tolerable exception rate
A danger in setting the acceptable risk of overreliance too low is:
the risk that the auditor is willing to take of accepting a control as ineffective when it is
effective _______
the risk that the auditor is willing to take of accepting a control as effective when it is
ineffective________ Answer: D. NO. YES.
When using statistical sampling, the auditor would most likely require a smaller sample if
the:
A) population increases.
B) desired reliability decreases.
C) desired precision interval narrows.
D) expected exception rate increases. Answer: B. desired reliability decreases
Whenever auditors use sampling, they risk making incorrect conclusions about the
population. The risk that the auditor concludes that controls are nore effective than they
actually are is known as the:
A) risk of overreliance.
B) risk of underreliance.
C) risk that the sample is not representative of the population.
D) risk that the sample conclusions cannot be useful because of nonprobability sampling.
Answer: A. risk of overreliance
When choosing the appropriate acceptable risk of overreliance, the auditor needs to:
A) rely on his/her professional judgment.
B) err on the side of conservatism.
C) consult the professional standards.
D) follow SEC guidelines. Answer: A. rely on her professional judgement
The difference between the tolerable exception rate and the estimated population
exception rate is called:
A) accuracy of the initial sample estimate.
B) inflation factor of the initial sample estimate.
C) precision of the initial sample estimate.
D) reliability of the initial sample estimate. Answer: C. precision of the initial
sample
If the result obtained from a particular sample for control and substantive tests of
transactions is critical to the formation of an audit opinion, which of the following is the
most important to the auditor in concluding of the appropriateness and sufficiency of
evidence gathered?
A) Acceptable risk of overreliance
B) Estimated population exception rate
C) Tolerable exception rate
D) Size of the population Answer: A. acceptable risk of overreliance
There is a(n) ________ relationship between acceptable risk of overreliance and planned
sample size.
A) direct.
B) inverse.
C) proportional.
D) exponential. Answer: B. inverse
Which of the following results in a larger sample size?
A) Decrease the estimated population exception rate and decrease the tolerable exception
rate.
B) Increase the estimated population exception rate and decrease the tolerable exception
rate.
C) Decrease the estimated population exception rate and increase the tolerable exception
rate.
D) Increase the estimated population exception rate and increase the tolerable exception
rate. Answer: B. increase the estimated population exception rate and decrease the
tolerable exception rate
An auditor plans to examine a sample of 40 canceled checks for a countersignature which
is prescribed in the client's control procedures manual. Two of the checks in sample
cannot be located by the company or the auditor. The auditor would most likely:
A) treat the missing checks as a deviation when evaluating the results of the sample.
B) draw a conclusion on a sample size of 38.
C) substitute two more checks to get to a sample size of 40.
D) recalculate the sample excluding the original 40 checks Answer: A. treat the
missing check as a deviation when evaluating the results of the sample
The auditor must use the same TER and ARO levels for all attributes of an audit test.
A) True
B) False Answer: B. false
The tolerable exception rate is the rate that the auditor will permit in the population and
still be willing to conclude a control is effective.
A) True
B) False Answer: A. true
The only way to know with certainty whether a sample is representative is to
subsequently audit the entire population.
A) True
B) False Answer: A. true
Acceptable risk of overreliance is the risk that the auditor is willing to take in accepting a
control as effective when the true population exception rate is greater than the estimated
population exception rate.
A) True
B) False Answer: B. false
Acceptable risk of overreliance is normally lower for a public company audit than a
private company audit.
A) True
B) False Answer: A. true
The conjoined sample exception rate is the auditor's "best estimate" of the actual
exception rate in the entire population.
A) True
B) False Answer: B. false
When the sample exception rate is greater than the tolerable exception rate in attributes
sampling, one possible appropriate course of action is to increase sample size.
A) True
B) False Answer: A. true
Tolerable exception rate (TER) is inversely related to sample size.
A) True
B) False Answer: A. true
When the SER exceeds the TER, the auditor should decide whether to increase sample
size or to revise assessed control risk on the basis of cost versus benefit.
A) True
B) False Answer: B. false
In nonstatistical sampling, the calculated sampling error is the difference between the
tolerable exception rate and the sample exception rate.
A) True
B) False Answer: A. true
Rodgers CPA believes that the rate of client billing errors is 4% and has established a
tolerable deviation rate of 6%. In auditing client invoices Rodgers should use:
A) stratified sampling.
B) classical sampling.
C) proportional sampling.
D) attributes sampling. Answer: D. attributes sampling
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 invoices for credit approval by the credit
manager.
D) Review the aged schedule of accounts receivable to determine if receivables from
officers are included. Answer: C. examine a sample of duplicate sales invoices for
credit approval by the credit manager
Attributes sampling is based on the ________ distribution, in which each possible sample
in the population has one of two possible values, such as yes or no.
A) random
B) binomial
C) statistical
D) nonstatistical Answer: B. binomial
For which of the following audit procedures would audit sampling not be appropriate?
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. Answer: A.
review sales transactions for large and unusual amounts
A principal advantage of statistical methods of attributes sampling over nonstatistical
methods is that they provide a scientific basis for establishing the:
A) risk of assessing control risk too low.
B) tolerable exception rate.
C) expected population exception rate.
D) sample size. Answer: D. sample size
In using sampling distribution for attributes, which one of the following must be known
to evaluate the sample results?
A) Estimated dollar value of the population
B) Standard exception of the values in the population
C) Actual exception rate of the attribute in the population
D) Sample size Answer: D. sample size
When audit procedures have been completed for an attributes sampling application, the
auditor must generalize from the sample to the population. Which of the following
statements would be incorrect regarding this process?
A) The auditor would use an attributes sampling table to determine the computed upper
exception rate.
B) If the sample size is not equal to those provided for in the attributes sampling
evaluation tables, the auditor cannot use attribute sampling.
C) It would be wrong for the auditor to conclude that the population exception rate is
exactly the same as the sample exception rate.
D) In selecting the table corresponding to the ARO, it should be the same as the ARO
used for determining the initial sample size. Answer: B. if the sample size is not
equal to those provided for in the attributes sampling evaluation tables, the auditor cannot
use attribute sampling
When deciding the acceptability of the population:
A) the methodology for deciding the acceptability of the population for attributes differs
from determining the acceptability for nonstatistical sampling.
B) before the population can be considered acceptable, the CUER determined on the
basis of the actual sample results must be less than or equal to TER when both are based
on the same ARO.
C) when the CUER is greater than the TER, the auditor must increase the sample size.
D) the CUER is compared with the TER in total, not for each attribute. Answer: B.
before the population can be considered acceptable, the CUER determined on the basis of
the actual sample results must be less than or equal to TER when both are based on the
same ARO.
In the evaluation of the results of an attributes sample, the fact that the exception rate in
the sample was 2% rather than the estimated population exception rate of 4% would
cause the computed upper exception rate to:
A) be less than the tolerable exception rate.
B) equal the tolerable exception rate.
C) exceed the tolerable exception rate.
D) cannot be determined from the information given. Answer: A. be less than the
tolerable exception rate
As the auditor you are assessing the proper sample size to use in testing controls. When
using attributes sampling which of the following is most correct?
A) A 10% change in population size will have the least effect on sample size.
B) A 10% change in the tolerable deviation rate will have the least effect on sample size.
C) A 10% change in the expected deviation rate will have the least effect on sample size.
D) A 10% change in the tolerable will have the least effect on sample size. Answer:
A. a 10% change in population size will have the least effect on sample size
In attributes sampling, an estimate of the expected population exception rate is necessary
to plan the sample size. The relationship of expected population exception rate (EPER) to
sample size is:
A) direct (small EPER = small sample).
B) inverse (small EPER = large sample).
C) a variable (sometimes small, sometimes large) dependent on other factors present.
D) indeterminate. Answer: A. direct (small EPER = small sample)
Statistical sampling eliminates any professional judgment for the auditor.
A) True
B) False Answer: B. false