Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
United States – AK – AICPA BB-Critical thinking
68. In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what
manners?
a.
Qualitatively and quantitatively.
b.
Absolutely and proportionately.
c.
Haphazardly and randomly.
d.
Methodically and systematically.
AUDT.JOHN.16.125 – Using Sampling to Test Account Balances and Assertions
United States – AK – AICPA BB-Critical thinking
69. In testing account balances, haphazard sampling is an acceptable method of sampling provided the auditor
believes the sample to be which of the following?
a.
b.
c.
d.
AUDT.JOHN.16.125 – Using Sampling to Test Account Balances and Assertions
United States – AK – AICPA BB-Critical thinking
70. When determining sampling size in attribute sampling, which of the following is usually true?
a.
Sampling risk will be too high.
b.
Tolerable misstatement amount is determined.
c.
A failure rate is not to be expected.
d.
Population size is not a major factor.
AUDT.JOHN.16.08-04 – LO: 08-04
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Attributes Sampling
71. Which of the following is not an item the auditor needs to determine in designing sampling for substantive
testing?
a.
The audit objective.
b.
The method of selecting a sample.
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
c.
Expected misstatement conditions.
d.
Expected deviation rate.
AUDT.JOHN.16.08-05 – LO: 08-05
United States – BUSPORG: Analytic
Using Sampling to Gather Evidence about Misstatements in Account Balances
72. Which of the following is a method of reducing non-sampling risk?
a.
Proper supervision and instruction of the client’s employees.
b.
Proper supervision and instruction of the audit team.
c.
The use of attributes sampling rather than variables sampling.
d.
Controls to ensure that the sample drawn is random and representative.
AUDT.JOHN.16.08-02 – LO: 08-02
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Objectives of Sampling and Risks Associated with Sampling
73. Which of the following is a factor that the auditor should consider when choosing between non-statistical
and statistical sampling?
a.
Whether the audit staff is adequately trained to use statistical sampling.
b.
Whether the population lends itself to a random-based selection method.
c.
Whether the auditor wants a statistical measure of the risk of drawing a wrong conclusion.
d.
All of the above.
AUDT.JOHN.16.126 – Non-statistical vs. Statistical Sampling
74. 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?
a.
MUS sampling.
b.
Stratified mean-per-unit sampling.
c.
Ratio estimation sampling.
d.
Attribute sampling.
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
1
AUDT.JOHN.16.128 – MUS
75. The results of MUS sampling will be unacceptable when the total estimated misstatement exceeds which of
the following?
a.
The tolerable error rate.
b.
The tolerable misstatement amount.
c.
The expected deviation rate.
d.
The expected deviation amount.
b
1
AUDT.JOHN.16.08-06 – LO: 08-06
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Monetary Unit Sampling
76. MUS is based on which of following?
a.
Attributes estimation sampling.
b.
Classical variables sampling.
c.
Population variability sampling.
d.
Expected error sampling.
1
AUDT.JOHN.16.08-06 – LO: 08-06
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Monetary Unit Sampling
77. MUS is designed to test for which of the following?
a.
Overstatements.
b.
Understatements.
c.
Neither understatements nor overstatements.
d.
Either understatements or overstatements.
78. Which of the following does the design of a MUS sample not require the auditor to determine?
a.
Risk of incorrect acceptance.
b.
Inherent risk.
c.
Ratio of expected misstatement to tolerable misstatement.
d.
Ratio of tolerable misstatement to the total population value.
b
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AUDT.JOHN.16.128 – MUS
United States – AK – AICPA BB-Critical thinking
79. 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?
a.
$16,000.
b.
$15,000.
c.
$14,000.
d.
$10,000.
b
1
AUDT.JOHN.16.128 – MUS
United States – AK – AICPA BB-Critical thinking
80. When planning a test of details using MUS sampling, tolerable misstatement is usually set at what level?
a.
Higher than performance materiality.
b.
Lower than performance materiality
c.
Higher than the expected error amount.
d.
Lower than the expected error amount.
b
1
AUDT.JOHN.16.08-06 – LO: 08-06
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Monetary Unit Sampling
81. In MUS, what is meant by a sampling interval of 900?
a.
Every 900th item will be selected.
b.
Every 900th dollar will be selected.
c.
Expected misstatement is 900.
United States – AK – AICPA BB-Critical thinking
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
d.
Tolerable misstatement is 900.
b
1
AUDT.JOHN.16.08-06 – LO: 08-06
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Monetary Unit Sampling
82. In using MUS, once the auditor has determined the sample size, which of the following is needed to
determine the sampling interval?
a.
Expected misstatement.
b.
Tolerable misstatement.
c.
Population size.
d.
Mean.
1
AUDT.JOHN.16.08-06 – LO: 08-06
United States – BUSPORG: Analytic
United States – AK – AICPA BB-Critical thinking
Monetary Unit Sampling
83. Which one of the following is a proper course of action for the auditor when the total estimated
misstatement exceeds the tolerable misstatement?
a.
The auditor can ask the client to correct the known misstatements.
b.
The auditor will analyze the detected misstatements for some common problems.
c.
The auditor can expand the sample.
d.
All of the above.
d
1
AUDT.JOHN.16.125 – Using Sampling to Test Account Balances and Assertions
84. MUS sampling has all of the following advantages over other statistical methods except which of the
following?
a.
Easier to apply than other statistical sampling approaches.
b.
Sample sizes are relatively small.
c.
It is a relatively easy way to make sure that negative balances and zero balances are included in the
sample.
d.
Usually results in a highly efficient sample size.
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
AUDT.JOHN.16.128 – MUS
85. Which of the following is a major disadvantage of MUS sampling?
a.
Sample selection is relatively easy.
b.
Sample sizes are relatively small.
c.
It is easy way to test for understatement.
d.
It directly controls for the risk of incorrect acceptance.
AUDT.JOHN.16.128 – MUS
United States – AK – AICPA BB-Critical thinking
86. That auditor will do which of the following when the results of sample testing conclude that there is
misstatement in excess of the tolerable misstatement?
a.
Issue a disclaimer of opinion.
b.
Throw out the sample.
c.
Propose adjustments to the client.
d.
Disclose the misstatement in the client’s financial statements.
AUDT.JOHN.16.125 – Using Sampling to Test Account Balances and Assertions
United States – AK – AICPA BB-Critical thinking
87. Which of the following is not a type of statistical method that provides results in dollar terms?
a.
Variables sampling.
b.
Attributes sampling.
c.
Monetary unit sampling.
d.
Probability proportional to size sampling.
AUDT.JOHN.16.132 – Objectives of Sampling
United States – AK – AICPA BB-Critical thinking
88. When an auditor uses MUS and analyzes misstatements in the lower stratum, which of the following will be
multiplied by the sampling interval to calculate the projected misstatement for each misstated item?
a.
Audit value.
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
b.
Tolerable misstatement.
c.
Sampling interval.
d.
Tainting percentage.
d
1
AUDT.JOHN.16.128 – MUS
89. In attribute sampling, which of the following does the risk of incorrect acceptance deal with?
a.
Effectiveness.
b.
Efficiency.
c.
Reliability.
d.
Both A and B.
1
AUDT.JOHN.16.127 – Attribute Sampling
United States – AK – AICPA BB-Critical thinking
90. In attribute sampling, the risk of incorrect rejection deals with which of the following?
a.
Effectiveness.
b.
Efficiency.
c.
Reliability.
d.
Both A and B.
b
1
AUDT.JOHN.16.127 – Attribute Sampling
United States – AK – AICPA BB-Critical thinking
91. Which of the following is a factor of nonsampling risk?
a.
Not carrying out the appropriate audit procedure.
b.
Having a sample which does not represent the population.
c.
Using a random sample selection
d.
Using non-statistical sampling
1
AUDT.JOHN.16.08-02 – LO: 08-02
92. Attribute sampling is used in which of the following situations?
a.
Testing rates of deviations of controls.
b.
Testing the reasonableness of account balances.
c.
Need to estimate some amount.
d.
Both A and B.
AUDT.JOHN.16.127 – Attribute Sampling
United States – AK – AICPA BB-Critical thinking
93. In selecting a sample for attribute testing, systematic selection involves which of the following approaches?
a.
Each item in the population having an equal chance of selection.
b.
Every nth item being selected after a random start.
c.
An arbitrary selection with no conscious bias.
d.
Selecting all items on a day or week.
AUDT.JOHN.16.127 – Attribute Sampling
94. In selecting a sample for attribute testing, haphazard selection involves which of the following approaches?
a.
Each item in the population having an equal chance of selection.
b.
Every nth item being selected after a random start.
c.
An arbitrary selection with no conscious bias.
d.
Selecting all items on a day or week.
AUDT.JOHN.16.127 – Attribute Sampling
United States – AK – AICPA BB-Critical thinking
95. In selecting a sample for attribute testing, block sampling involves which of the following approaches?
a.
Each item in the population having an equal chance of selection.
b.
Every nth item being selected after a random start.
c.
An arbitrary selection with no conscious bias.
d.
Selecting all items on a day or week.
Objectives of Sampling and Risks Associated with Sampling
96. Sampling risk deals with which of the following?
a.
Not carrying out the appropriate audit procedure.
b.
Drawing an incorrect inference from the sample results.
c.
Inappropriately diagnosing client’s problems.
d.
Both A and C.
AUDT.JOHN.16.pling – Risks of Sampling
United States – AK – AICPA BB-Critical thinking
97. Which of the following are limitations of using the MUS sampling method?
a.
MUS is not very useful in testing for understatement.
b.
MUS is not very useful in testing for zero and negative amounts.
c.
N MUS is not very useful in testing if the auditor expects numerous misstatements.
d.
All of the above.
AUDT.JOHN.16.128 – MUS
United States – AK – AICPA BB-Critical thinking
98. In testing the reasonableness of an account balance, if MUS sampling cannot be used because of its
limitations, what is an alternative statistical method?
a.
Attribute sampling.
b.
Classical variables sampling.
c.
Discovery sampling.
d.
All of the above.
AUDT.JOHN.16.125 – Using Sampling to Test Account Balances and Assertions
United States – AK – AICPA BB-Critical thinking
99. When evaluating the MUS sample results, the auditor calculates the total estimated misstatement in the
account balance based on the sampling process using which of the following components?
a.
Basic Precision.
b.
Projected misstatement for items in lower-stratum.
c.
Incremental Allowance for Sampling Error.
AUDT.JOHN.16.127 – Attribute Sampling
United States – AK – AICPA BB-Critical thinking
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
d.
All of the above.
d
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AUDT.JOHN.16.128 – MUS
100. Which of the following task is not performed by generalized audit software?
a.
Footing a file.
b.
Obtaining file statistics.
c.
Checking for gaps in processing sequences.
d.
Preparing custom reports.
e.
All of the above tasks can be performed using GAS.
1
AUDT.JOHN.16.129 – Using GAS
United States – AK – AICPA BB-Critical thinking
101. Dividing the population into relatively homogeneous groups in order to reduce sample size is the definition
of which of the following terms?
a.
Ratio estimation.
b.
Difference estimation.
c.
Stratification.
d.
MUS sampling.
1
AUDT.JOHN.16.132 – Objectives of Sampling
United States – AK – AICPA BB-Critical thinking
102. Sampling factors
List the four important decisions an auditor must make when deciding to use sampling.
103. Nonsampling risk
What is nonsampling risk and how can it be eliminated?
1
AUDT.JOHN.16.pling – Risks of Sampling
United States – AK – AICPA BB-Critical thinking
104. Risks of sampling in tests of controls
Define the following terms as they relate to sampling for tests of controls:
1.
tolerable failure rate
2.
expected failure rate
population.
1
AUDT.JOHN.16.pling – Risks of Sampling
United States – AK – AICPA BB-Critical thinking
105. Planning and documentation of an attribute sampling plan
What are the steps to implement an attribute sampling plan?
United States – AK – AICPA BB-Critical thinking
106. Evaluating misstatements when using sampling to test account balances
Explain the term “misstatement” as it applies to sampling during substantive procedures and explain how the
term may be interpreted differently by different auditors.
107. Choosing sampling methods
Identify the factors that an auditor would consider when choosing between non-statistical sampling and
statistical sampling.
108. Using MUS sampling
Describe MUS sampling and identify the conditions that would cause an auditor choose to use MUS sampling.
109. Sampling and non-sampling risk
Discuss what is meant by “sampling risk” and “nonsampling risk”.
110. Application of MUS
Explain why monetary unit sampling is not useful for detecting understatements
111. Advantages of MUS sampling
Chapter 8 – Specialized Audit Tools: Sampling and Generalized Audit Software
Discuss the advantages of monetary unit sampling over other sampling methods.
112. Upper Misstatement Limit
When evaluating the MUS sample results, the auditor calculates the total estimated misstatement in the account
balance based on the sampling process. Describe the four components that make up this total.
113. Sample selection
Before procedures using statistical or non-statistical sampling methods begin, the auditor must determine how
the sample will be selected. Discuss the various types of sample selection, when they are used and, generally,
how they are used. Give examples.
114. Non-statistical sampling
Describe non-statistical sampling for test of account balances and how it is used by the auditor.