Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 9, Problem 25RQ
To determine
Explain the options available to the auditor when the client’s book value falls outside the confidence (acceptance) interval calculated using the estimate of the total value of the population.
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Students have asked these similar questions
Which one of the sentences below is FALSE?
A.
The risk of incorrect acceptance called beta risk has the consequence that the auditor may assume that the population is free of material misstatement.
B.
The risk of incorrect rejection is called alpha risk and has the consequence that the auditor may assume on the basis of sample results that a population is materially misstated when, in fact, it is not .
C.
The risk of incorrect acceptance is called beta risk.
D.
The risk of incorrect rejection very common in audit sampling is called beta risk.
Comparison of calculated confidence limits with acceptable misstatement is key to difference estimate. As an auditor, what do you do when one of the confidence limitations is bigger than your acceptable misstatement threshold?
Tolerable error, is the maximum monetary error that the auditor is prepared to accept in the population and still conclude that audit objective has been achieved, is directly related to
A.Sample size
BAudit risk
C.Materiality
D.Expected error
Chapter 9 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - What is a dual-purpose test?Ch. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - What would be the difference between an attributes...Ch. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25RQCh. 9 - Prob. 26RQCh. 9 - Prob. 27RQCh. 9 - Prob. 28RQCh. 9 - Prob. 29QRACh. 9 - Prob. 30QRACh. 9 - Prob. 31QRACh. 9 - Prob. 32QRACh. 9 - Prob. 33QRACh. 9 - Prob. 34QRACh. 9 - Prob. 35QRACh. 9 - Prob. 36QRACh. 9 - Prob. 37AOQCh. 9 - Prob. 37BOQCh. 9 - Prob. 37COQCh. 9 - Prob. 37DOQCh. 9 - Prob. 37EOQCh. 9 - Prob. 37FOQCh. 9 - Prob. 37GOQCh. 9 - Prob. 37HOQCh. 9 - Prob. 37IOQCh. 9 - Prob. 37JOQCh. 9 - Prob. 37KOQCh. 9 - Prob. 37LOQCh. 9 - Prob. 38OQCh. 9 - Prob. 39OQCh. 9 - For each term in the first column below, identify...Ch. 9 - Prob. 41OQCh. 9 - Smith, Inc. Rachel Robertson wishes to use...Ch. 9 - Prob. 43OQCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Prob. 47PCh. 9 - In the audit of Potomac Mills, the auditors wish...Ch. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - Prob. 51PCh. 9 - Prob. 52ITC
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Similar questions
- The maximum amount of error in a population that the auditor is willing to accept is referred to as the acceptable risk expected error tolerable error tolerable materialityarrow_forwardWhat options are available to the audit team if the ULRD is greater than the tolerable rate of deviation?arrow_forwardWhat responses should an auditor take based on different levels of acceptable detection risk (DR)? What type of tests should be performed?arrow_forward
- The risk that the decision made based on the sample will differ from the decision madebased on the entire population is referred to asa. Audit risk.b. Examination risk.c. Sampling risk.d. Nonsampling riskarrow_forwardIn determining the sample size for a test of controls, an auditor should consider the expected deviation rate, desired confidence level, and the * O Nature and cause of deviations O Population size O Risk of incorrect acceptance O Tolerable deviation ratearrow_forwardAn essential step in difference estimation is the comparisonof each computed confidence limit with tolerable misstatement. Why is this step soimportant, and what should the auditor do if one of the confidence limits is larger thanthe tolerable misstatement?arrow_forward
- Why would an auditor use observation to gather evidence? What are the strengths and weaknesses of this type of test?arrow_forwardThe 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 is the exception rate that the auditor expects to find before testing? Sample exception rate Estimated population exception rate Computed exception rate Tolerable exception ratearrow_forward
- Explain how the following test of control will affect the sample size? a. An increase in the extent to which the auditor's risk assessment takes into account relevant controls b. An increase in the tolerable rate of deviation c. An increase in the expected rate of deviation of the population to be testedarrow_forwardWhich of the following would not result in exposure to nonsampling risk?a. Measuring the characteristic of interest in an inappropriate manner.b. Selecting items that are not representative of the population of interest.c. Making an unintentional mistake in measuring the characteristic of interest.d. All of the above would result in exposure to nonsampling risk.arrow_forwardWhich of the following best describes the method of determining the ULRD?a. Expected population deviation rate + Allowance for sampling risk.b. Risk of underreliance + Allowance for sampling risk.c. Sample rate of deviation + Allowance for sampling risk.d. Tolerable rate of deviation + Allowance for sampling risk.arrow_forward
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