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Auditing Chapter 8 Homework

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Auditing Chapter 8 Homework
Kayla Harbaugh
Quiz by Kayla Harbaugh, updated more than 1 year ago
Kayla Harbaugh
Created by Kayla Harbaugh about 4 years ago
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Resource summary

Question 1

Question
For which of the following audit procedures would sampling be most appropriate?
Answer
  • Inquiry
  • Confirmation
  • Analytics
  • Observation

Question 2

Question
Which one of the following is not a decision the auditor makes when using attributes sampling?
Answer
  • Whether to document all phases of the sampling process
  • Evaluation of sample information
  • Selection of items included in the sample
  • Sample size

Question 3

Question
Which one of the following is a decision the auditor makes when using attributes sampling?
Answer
  • The sampling unit
  • Period covered by testing
  • Completeness of the population
  • All of the above are auditor decisions

Question 4

Question
Which of the following describes sampling risk?
Answer
  • The sample size will be larger than needed.
  • The auditor incorrectly applies sampling methodology.
  • The population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect.
  • The sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect.

Question 5

Question
Which of the following occurs when, based on sample results, control risk is assessed excessively high?
Answer
  • A less expensive audit
  • Errors that are more likely to occur than anticipated
  • Reduction of substantive testing
  • Audit inefficiency

Question 6

Question
Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?
Answer
  • Incorrect rejection
  • Incorrect acceptance
  • Insufficient sample size
  • None of the above

Question 7

Question
When performing sampling, the auditor is most concerned with which of the following?
Answer
  • Risk of incorrect acceptance
  • Risk of excess sample size
  • Risk of errors in the population
  • Risk of incorrect rejection

Question 8

Question
While auditors may use either statistical or nonstatistical sampling, some auditors restrict the use of nonstatistical sampling for what reason?
Answer
  • It is less objective
  • It is less effective
  • It is less efficient
  • It is less risky

Question 9

Question
Which of the following is the level at which the control’s failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor’s planned assessment of control risk in performing tests of account balances?
Answer
  • Allowable risk of assessing control risk too low
  • Allowance for sampling error
  • Tolerable failure rate
  • Expected failure rate

Question 10

Question
When performing attributes sampling, which of the following varies directly with the sample size?
Answer
  • The tolerable failure rate
  • The risk of over-reliance
  • The non-sampling risk
  • The expected failure rate

Question 11

Question
In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what manners?
Answer
  • Absolutely and proportionately
  • Haphazardly and randomly
  • Methodically and systematically
  • Qualitatively and quantitatively

Question 12

Question
In testing account balances, haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?
Answer
  • Statistically sound
  • Representative of the population
  • In the upper stratum
  • Representative of the sample

Question 13

Question
When determining sample size in attributes sampling, which of the following is usually true?
Answer
  • Tolerable misstatement amount is determined
  • Sampling risk will be too high
  • Population size is not a factor
  • A failure rate is not to be expected

Question 14

Question
Which of the following is a factor that the auditor should consider when choosing between nonstatistical and statistical sampling?
Answer
  • Whether the audit staff is adequately trained to use statistical sampling
  • Whether the population lends itself to use a random-based selection method
  • Whether the auditor wants a statistical measure of the risk of drawing a wrong conclusion
  • All of the above

Question 15

Question
When confirming receivables in testing for overstatements, assume that there are few or no misstatements expected and the selection will be based on the dollar value of individual items. Which of the following is the auditor most likely to use?
Answer
  • Stratified mean-per-unit sampling
  • Attribute sampling
  • Ratio estimation sampling
  • MUS sampling

Question 16

Question
The results of MUS sampling will be unacceptable when the total estimated misstatement exceeds which of the following?
Answer
  • The tolerable misstatement amount
  • The expected deviation rate
  • The tolerable error rate
  • The expected deviation amount

Question 17

Question
MUS is based on which of following?
Answer
  • Attributes sampling
  • Classical variables sampling
  • Expected error sampling
  • Population variability sampling

Question 18

Question
MUS is designed to test for which of the following?
Answer
  • Understatements
  • Either understatements or overstatements
  • Overstatements
  • Neither understatements or overstatements

Question 19

Question
When using MUS, an auditor found that the sampling interval should be $15,755. If selecting the sample manually, the auditor should round the sample interval to which of the following amounts?
Answer
  • $16,000
  • $15,000
  • $10,000
  • $14,000

Question 20

Question
When planning a test of details using MUS sampling, tolerable misstatement is usually set at what level?
Answer
  • Lower than the expected error amount
  • Higher than performance materiality
  • Lower than performance materiality
  • Higher than the expected error amount

Question 21

Question
In MUS, what is meant by a sampling interval of 900?
Answer
  • Expected misstatement is 900
  • Every 900th dollar will be selected
  • Tolerable misstatement is 900
  • Every 900th item will be selected

Question 22

Question
Which one of the following is a proper course of action for the auditor when the total estimated misstatement exceeds the tolerable misstatement?
Answer
  • The auditor can ask the client to correct the known misstatements
  • The auditor will analyze the detected misstatements for some common problems
  • The auditor can expand the sample
  • All of the above

Question 23

Question
The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?
Answer
  • Throw out the sample
  • Propose adjustments to the client
  • Issue a disclaimer of opinion
  • Disclose the misstatement in the client's financial statements

Question 24

Question
In attributes sampling, which of the following does the risk of incorrect acceptance deal with?
Answer
  • Effectiveness
  • Efficiency
  • Reliability
  • Both A and B

Question 25

Question
In attributes sampling, the risk of incorrect rejection deals with which of the following?
Answer
  • Effectiveness
  • Efficiency
  • Reliability
  • Both A and B

Question 26

Question
Which of the following is a factor of nonsampling risk?
Answer
  • Using non statistical sampling
  • Using a random sample selection
  • Having a sample which does not represent the population
  • Not carrying out the appropriate audit procedure

Question 27

Question
In selecting a sample for attributes testing, haphazard selection involves which of the following approaches?
Answer
  • An arbitrary selection with no conscious bias
  • Every nth item being selected after a random start
  • Selecting all items on a day or week
  • Each item in the population having an equal chance of selection

Question 28

Question
In selecting a sample for attributes testing, block sampling involves which of the following approaches?
Answer
  • An arbitrary selection with no conscious bias
  • Every nth item being selected after a random start
  • Selecting all items on a day or week
  • Each item in the population having an equal chance of selection

Question 29

Question
Which of the following tasks is not performed by data analytics tools?
Answer
  • Footing a file
  • Obtaining file statistics
  • Checking for gaps in processing sequences
  • Preparing custom reports
  • All of the above tasks can be performed using data analytics tools

Question 30

Question
Which of the following data analytics tools might an auditor use to test the completeness assertion for sales?
Answer
  • Analyze data to assess the proper operation of sales cutoff tests around year-end
  • Age accounts receivable
  • use data visualization tools to evaluate disclosures about sales and profitability
  • All of the above
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