In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too high relate to the
If the achieved allowance for sampling risk of a statistical sample at a given reliability level is greater than the desired range, this is an indication that the standard deviation .
Auditor initially planned to use unrestricted random sampling with replacement when testing AR. Later, the auditor decided to use unrestricted random sampling without replacement. As a result only of this decision, the sample size should .
In which of the following cases would the auditor be most likely to conclude that all of the items in an account under consideration should be examined rather than tested on a sample basis?
The measure of Error frequency is tolerable error is expected to be
Large Low
Small High
Large High
Small Low
An advantage of using statistical sampling is that such techniques .
In comparison with probability-proportional-to-size (PPS) sampling, which of the following is an advantage of classical variables sampling in auditing?
If no errors are expected, classical variables sampling usually results in a smaller sample size than PPS sampling
A classical variables sample can be designed more easily and sample selection can begin before the complete population is available
If there are many individual differences between recorded and audited amounts in the population, classical variables sampling may result in a smaller sample size
Classical variables sampling automatically results in a stratified sample because items are selected in proportion to their dollar amounts
In a variables sampling plan, an auditor must generally consider each of the following except
Variation within the population.
Acceptable risk of incorrect acceptance.
Tolerable error.
Population size.
In assessing the risk of incorrect acceptance, an auditor should consider each of the following except
Audit risk.
The risk that internal control structure fails to detect material errors that occur.
The risk that analytical procedures and other tests fail to detect material errors that occur and that are not detected by internal control.
An auditor is evaluating the results of a variables sampling plan. Which of the following is not relevant to the auditor's judgment about the sample?
Management's explanations for why errors in the sample occurred
Projecting the sample error to the population
Considering the effects of sampling risk
Qualitative information that lends insight into errors found
Several conditions must be met before an auditor applies either difference or ratio estimation. Which of the following is not one of these conditions?
Each population item must have a recorded book value
The auditor must not expect understatement errors
Total population book value must be known and must correspond to the sum of all individual population items
Expected differences between audited and recorded book values must not be too rare
An auditor is applying a difference estimation sampling plan. Assuming the risk of incorrect rejection is .10, and the risk of incorrect acceptance is .05, what is the ratio of desired allowance for sampling risk to tolerable error?
Auditor is applying a difference estimation sampling plan. Assuming .1 acceptable risk of incorrect rejection, .05 acceptable risk of incorrect acceptance, and $100,000 tolerable error, what is the auditor's desired allowance for sampling risk?
An auditor is applying a difference estimation sampling plan. Recorded book value is $1,000,000, and the auditor estimates a $75,000 understatement difference. In this case, the auditor's estimated population value is
An auditor is applying mean-per-unit estimation. Assuming estimated audited value is $950,000, the achieved allowance for sampling risk is $75,000, and recorded book value is $925,000, what is the auditor's conclusion?
Recorded book value is not likely misstated by a material amount.
Recorded book value is misstated by a material amount.
Recorded book value is not likely misstated by a material amount, assuming the client records an adjusting journal entry equal to the allowance for sampling risk.
There is insufficient evidence to reach a conclusion.
In comparison with classical variables sampling, which of the following is an advantage of probability-proportional-to-size (PPS) sampling?
PPS sampling automatically results in a stratified sample
PPS sampling results in a smaller sample size if many differences are expected between audited and recorded amounts
PPS sampling is particularly appropriate when understatement errors are expected
PPS sampling is less likely to overstate the allowance for sampling risk when errors are found in the sample
