Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 15, Problem 27DQP
a.
To determine
Explain the cost and benefits of using the statistical sampling over the non-statistical sampling.
b.
To determine
Explain the relationship between the audit risk, sampling risk and non-sampling risk.
c.
To determine
Discuss the situation when sampling is not an appropriate method of performing tests of controls.
d.
To determine
Explain the risk of assessing control risk too low and the risk of assessing control risk too high. Also, explain the impact of risk on the efficiency and effectiveness of the audit.
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In auditing, can anyone who uses sampling such as statistical and non-statistical sampling be absolutely sure that the sample is representative of the population from which it is drawn?
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Chapter 15 Solutions
Auditing And Assurance Services
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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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Similar questions
- 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?arrow_forwardExplain how judgement is used in statistical and non-statistical sampling in an audit servicearrow_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_forward
- In auditing, can anyone who uses sampling be absolutely sure that the sample is representative of the population from which it is drawn? Please provide references if any.arrow_forwardThe 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_forwardAn 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 sizesarrow_forward
- Discuss the differences between a first-party, second-party, and third-party audit. Discuss the importance of data accuracy and integrity in a quality information system. What are the purposes of quality documentation systems? What would be the foremost characteristics of an acceptable sampling plan for critical defects?arrow_forwardYou and a friend are studying audit sampling together. Your friend is having a hard time understanding the various aspects of risk associated with attribute sampling and has put together the following list of questions she wants to discuss with you. Answer each question. a. What is:■Audit risk?■Inherent risk?■Control risk?■Controllable risk?■Residual risk? b. What is sampling risk? How is sampling risk controlled? c. What are the two aspects of sampling risk that an internal auditor is concerned with when testing controls? Briefly describe each aspect. d. What is nonsampling risk? How is nonsampling risk controlled?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_forward
- • The Choose the answer from the menu in accordance to the question statement _--_ method includes both an estimate of the audited value of the population (or the amount of misstatements in the population) and an estimate of a statistical confidence interval, or allowance for sampling risk associated with the estimate. > Appropriate > Statstical sampling > Non-statistical sampling • Control risk is the risk that the sample chosen by the auditor is not representative of the population of transactions or items within an account balance and, as a consequence, the auditor arrives at an inappropriate conclusion. True Falsearrow_forwardIt is important to recognize that audit sampling may be constructed on a nonstatistical basis.If the auditor uses statistical sampling, probability theory will be used to determine sample sizeand random selection methods to ensure each item or GHc1 in value of the population has thesame chance of selection. Non-statistical sampling is more subjective than statistical sampling,typically using haphazard selection methods and placing no reliance on probability theory.However, in certain circumstances statistical sampling techniques may be difficult to use. Theauditor will review the circumstances of each audit before deciding whether to use statisticalor non-statistical sampling a. Describe to what extent statistical sampling enhances the quality of the audit evidence.b. Explain how judgement is used in statistical and non-statistical sampling c. Explain what you understand by the following terms:(i) Random sampling(ii) Monetary unit sampling.arrow_forwardWhat is the purpose of sampling in auditing? Why is it relevant in performing test of controls and substantive testing?arrow_forward
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