Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 17, Problem 21.1MCQ
To determine
Indicate the reason for using stratified sampling.
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Which of the following statements is correct about monetary unit sampling?a. The risk of incorrect acceptance must be specified.b. Smaller logical units have a higher probability of selection in the sample than larger units.c. Each logical unit in the population has an equally likely chance of being selected in the sample.d. The projected misstatement cannot be calculated when one or more misstatements are discovered.
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
Which of the following statements about attribute sampling is correct?
A.
Larger transactions have a higher chance of being selected into the sample than smaller transactions.
B.
The risk of over-reliance does not affect the sample size.
C.
Attribute sampling is often used in the test of controls.
D.
The haphazard selection method is often used for attribute sampling.
E.
If the estimated population deviation rate is higher than the tolerable deviation rate, auditors conclude the internal control is effective.
Chapter 17 Solutions
Auditing And Assurance Services
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- Sample Size Determination. Review each of the following independent sets of conditions.Required:Use AICPA sample size tables to identify the appropriate sample size for use in a statistical sampling application (ROO = risk of overreliance, EPDR = expected population deviation rate, TRD = tolerable rate of deviation). What is your conclusion regarding the relationship of each of these factors to sample size based on comparing the sample sizes across differentcombinations of these factors?a. ROO = 5%, EPDR = 0%, TRD = 7%.b. ROO = 5%, EPDR = 3%, TRD = 7%.c. ROO = 5%, EPDR = 3%, TRD = 6%.d. ROO = 10%, EPDR = 0%, TRD = 7%.arrow_forwardSelect the necessary words from the list of possibilities to complete the following statements. 1. 2. 7. Inherent in the use of sampling is representative of the population. 9. When the auditors estimate sampling risk using professional judgment rather than by using the laws of probability, they are said to be using. sampling. an item from the population may be selected two or more times for inclusion in the When using sample. The term 3. 4. 5. In performing tests of controls, the auditors are primarily concerned with the risk of assessing 6. To use attributes sampling tables, the auditors must stipulate the desired risk of assessing control risk too low, the expected deviation rate in the population, and the desired Statements risk which is the possibility of selecting a sample that i not refers to the process of dividing a population into relatively homogeneous subgroups. sampling is usually used in situations in which the auditors expect a very low rate of occurrence of some…arrow_forwardWhat alternative courses of action are appropriate when a population is rejected using nonstatistical sampling for tests of details of balances? Whenshould each option be followed?arrow_forward
- The primary benefit of using nonstatistical sampling is thata. It generally results in a smaller sample size.b. It removes the need to consider allowance for sampling risk.c. It is simpler to use.d. All of the above are true.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_forwardSample Results Evaluation.Required:Review each of the following independent sets of conditions. For each condition, calculatethe (1) sample rate of deviation, (2) ULRD, and (3) allowance for sampling risk (n = samplesize, d = deviations, ROO = risk of overreliance). What is your conclusion regarding therelationship of each of these factors to the ULRD based on comparing the ULRD across different combinations of these factors?a. n = 100, d = 8, ROO = 5%.b. n = 100, d = 4, ROO = 5%.c. n = 100, d = 8, ROO = 10%arrow_forward
- The more assurance the auditor wants, _______. A. the less representative a sample should be of the population, and the more testing the auditor needs to do B. the more representative a sample should be of the population, but the less testing the auditor needs to do to gain efficiency C. the more representative a sample should be of the population, and the more testing the auditor needs to do D. the less representative a sample should be of the population, and the less testing the auditor needs to doarrow_forwardWhich of the following pairs of selection methods could appropriately be used in statistical sampling applications?a. Unrestricted random selection, block selection.b. Block selection, haphazard selection.c. Systematic random selection, haphazard selection.d. Unrestricted random selection, systematic random selection.arrow_forward1. Which of the following would be designed to estimate a numerical measurement of a population, such as monetary value?* A. Sampling for variables B. Sampling for attributes C. Sequential sampling D. Discovery sampling E. None of themarrow_forward
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