Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 15, Problem 25.1MCQ
To determine
Explain advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor:
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1.1.Sampling is important in an audit process. Briefly explain the value of sampling in the audit process.
1.2. Identify and explain the two types of sampling risks?
Which of the following is not a method that auditors use to control their exposure to sampling risk during the examination?a. Determining an appropriate sample size.b. Performing the appropriate audit procedure.c. Ensuring that all items have an equal opportunity to be selected.d. Evaluating sample results using a mathematical basis
An advantage of statistical sampling over nonstatistical sampling methods is that statistical methodsa. Afford more assurance than a nonstatistical sample of equal size.b. Provide an objective basis for quantitatively evaluating sampling risk.c. Can more easily convert the sample into a dual-purpose test useful for substantive procedures.d. Eliminate the need to use judgment in determining appropriate sample sizes
Chapter 15 Solutions
Auditing And Assurance Services
Ch. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - Prob. 14RQCh. 15 - Distinguish between the TER and the CUER. How is...Ch. 15 - Prob. 16RQCh. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Prob. 20RQCh. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23.1MCQCh. 15 - Prob. 23.2MCQCh. 15 - Prob. 23.3MCQCh. 15 - Prob. 24.1MCQCh. 15 - Prob. 24.2MCQCh. 15 - Prob. 24.3MCQCh. 15 - Prob. 25.1MCQCh. 15 - Prob. 25.2MCQCh. 15 - Prob. 25.3MCQCh. 15 - Prob. 26.1MCQCh. 15 - Prob. 26.2MCQCh. 15 - Prob. 26.3MCQCh. 15 - Prob. 27DQPCh. 15 - Prob. 28DQPCh. 15 - Prob. 30DQPCh. 15 - Prob. 31DQPCh. 15 - Prob. 32DQPCh. 15 - Prob. 36DQPCh. 15 - Prob. 37DQPCh. 15 - Prob. 38C
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- The two types of sampling risks that auditors face include the risk of incorrect acceptance and the risk of incorrect rejection. What do each of these mean and how will each impact the audit process and the audit results? Which is considered the more important risk?arrow_forwardThe two types of sampling risks auditors face include the risk of incorrect acceptance and the risk of incorrect rejection. What do each of these mean and how will each impact the audit process and the audit results?arrow_forwardFor both tests of controls and substantive tests of details, non-sampling risk can be reduced by increasing sample size, while sampling risk can be reduced by proper engagement planning supervision and review. TRUE OR FALSE? WHY?arrow_forward
- In an environment that is highly automated, an auditor determines that it is not possible toreduce detection risk solely by using substantive tests of transactions. Under these circumstances, the auditor most likely woulda. Perform tests of controls to support a lower level of assessed control risk.b. Increase the sample size to reduce sampling risk and detection risk.c. Adjust the materiality level and consider the effect on inherent risk.d. Apply analytical procedures and consider the effect on control riskarrow_forwardNon-statistical sampling is commonly used in audit practice. Describe each of the four items required in a non-statistical audit test. Discuss the reasons why you would use, or not use, this type of testing for account transactions whose values range from very material to immaterial amounts. Describe why you believe non-statistical sampling is best for material vs immaterial amount testing, or vice versa.arrow_forward2. Which of the following is not true about the advantages of statistical sampling approach? * A. The auditor is in a better position to calculate sampling risks. B. Sample findings are evaluated in a more "scientific" way. C. The sample is more efficiently designed. D. The auditor is in a better position to control sampling risks. E. None of themarrow_forward
- In using audit sampling for exception rates: the auditor wants to know the most the exception rate is likely to be. sampling error is the likelihood that the auditor will miss a monetary misstatement. the upper limit of the interval estimate is known as the sampling risk. CUER cannot be considered in the context of specific audit objectives.arrow_forwardWhich of the following is not an advantage of non-statistical sampling? a) It allows an auditor to select a sample that they believe is appropriate. b) It allows an auditor to measure sampling risk. c) It is lower cost than statistical sampling. d) It requires less staff training.arrow_forwardAuditors must be aware of sampling risks because: A The risk of type 2 error due to increased sampling might be avoided by increasing tests of controlsB The risk of a type 2 error is that decreased sampling might be avoided by increasing the materiality thresholdC The risk of a type 1 error due to decreased sampling might be avoided by reducing the substantive testsD The risk of a type 2 error is that a decreased sample might have a greater impact on audit costsE The risk with a type 1 error is that increased sampling will not have a greater impact on the auditor's opinionarrow_forward
- Attribute sampling enables the auditor to directly assess whether a rule is operating successfully or not, sampling is more reliable for assessing controls. This is crucial in circumstances where data accuracy or completeness are essential, such as when a credit-check control is used for consumer orders. The focus is on estimating the overall monetary value of a population, therefore monetary-unit sampling is more suitable for verifying the accuracy of financial statements or specific account balances. It is crucial to remember that the exact audit objectives and the type of data being checked will determine the sampling technique that is used. Do you believe monteray unit sampling can do the same thing?arrow_forwardRisk of incorrect rejection is defined as _______. the risk that the auditor concludes that a material misstatement does not exist when it does exist the risk that the auditor concludes that a material misstatement exists when it does not exist the risk that an auditor incorrectly rejects a client the risk that management may reject the audit opinion issued by the auditor An advantage of statistical sampling _______. is that it allows an auditor to measure control risk is that it allows an auditor to measure sampling risk is that it allows an auditor to measure inherent risk is that it is cheaper to perform, resulting in lower audit fees for the clientarrow_forward(c)Describe the factors which theauditor should consider whendetermining the size of a sample. (d) Describe to what extent statistical sampling enhances the quality of the audit evidence. (e) Explain how judgementis used in statistical and non-statistical sampling.arrow_forward
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