Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
1. Auditing standards permit both statistical and nonstatistical methods of audit sampling.
2. A Type I error is the risk of incorrect acceptance.
3. A Type II error is the risk of incorrect acceptance.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
4. Confidence level is the complement of sampling risk.
5. Confidence level and sampling risk are related to sample size.
6. The larger the sample, the lower the confidence level and the lower the sampling risk.
7. Audit sampling is commonly used to gather confirmation audit evidence.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
8. Audit sampling is commonly used to gather scanning audit evidence.
9. Attribute sampling is used to estimate the proportion of a population that possesses a
specified characteristic.
10. With a nonstatistical sampling application, the auditor relies on professional judgment
rather than the laws of probability to reach a conclusion about the audit test.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
11. Which of the following best illustrates the concept of sampling risk?
12. Jones, CPA, believes the industry-wide deviation rate of client billing errors is 3% and has
established a tolerable deviation rate of 5%. In the review of client invoices, Jones should use
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
13. The tolerable deviation rate for a test of controls is generally
14. The risk of incorrect acceptance relates to the
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
15. The likelihood of assessing control risk too high is the risk that the sample selected to test
controls
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
17. Harvey Jones, CPA, uses statistical sampling to test control procedures. What is a benefit of
18. In addition to evaluating the frequency of deviations in tests of controls, an auditor should
also consider certain qualitative aspects of the deviations. The auditor most likely would give
broader consideration to the implications of a deviation if it was
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
19. An underlying feature of random-based selection of items is that each
20. An auditor plans to examine a sample of 20 checks for countersignatures as prescribed by
the client’s internal control procedures. One of the checks in the chosen sample of 20 cannot be
found. The auditor should consider the reasons for this limitation and
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
21. An auditor is testing internal control procedures that are evidenced on an entity’s vouchers.
To select the vouchers for testing, the auditor obtains random numbers between the first and last
voucher number in the period. If a random number matches the number of a voided voucher,
that voucher ordinarily should be replaced by another voucher in the random sample if the
voucher
22. Which of the following statements is correct concerning statistical sampling in compliance
testing?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
23. In determining the sample size for a test of controls, an auditor should consider the expected
deviation rate, desired confidence level, and the
24. In attributes sampling, a 10% change in which of the following factors normally will have
the least effect on the size of a statistical sample?
25. The computed upper deviation rate is
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
26. In attributes sampling, population size has little or no effect on sample size once the
population exceeds approximately
27. A control is deemed to be more important than thought at the time that attributes sampling
parameters were set. The auditor is most likely to respond by
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
28. If auditors conducting attributes sampling found that the client deviated from a prescribed
control in nine of the first 10 items examined, the auditor is most likely to
29. When testing automated IT controls, the auditor is most likely to do all of the following
except:
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
30. 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?
31. Which of the following factors does an auditor generally need to consider in planning a
particular audit sample for a test of controls?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
32. As a result of tests of controls, an auditor incorrectly assessed control risk too low and
decreased substantive testing. This assessment occurred because the true deviation rate in the
population was
33. As a result of tests of controls, an auditor over relied on internal control and decreased
substantive testing. This overreliance occurred because the true deviation rate in the population
was
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
34. If the expected deviation rate exceeds the tolerable deviation rate, the auditor is most likely
to
35. For an attributes sampling plan, the tolerable deviation rate is 4.5%, the computed upper
deviation rate is 7%, the sample deviation rate is 3%, and the desired confidence level is 95%.
What is the allowance for sampling risk included in the computed upper deviation rate?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
36. Based on a 5% risk of assessing control risk too low, how would an auditor interpret a
computed upper deviation rate of 7%?
37. Auditors who prefer statistical to nonstatistical sampling believe that the principal
advantage of statistical sampling flows from its unique ability to