Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
38. Which of the following best describes the distinguishing feature of statistical sampling?
39. Statistical sampling provides a technique for
40. Auditors who prefer statistical sampling to nonstatistical sampling may do so because
statistical sampling helps the auditor
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
41. An advantage of using statistical over nonstatistical sampling methods in tests of controls is
that the statistical methods
42. An auditor who uses statistical sampling for attributes in testing internal controls is most
likely to reduce the planned reliance on a prescribed control when the
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
43. If the size of the sample to be used in a particular test of controls has not been determined by
utilizing statistical concepts, but the sample has been chosen in accordance with random
selection procedures
44. When performing a test of controls with respect to control over cash receipts, an auditor
may use a systematic sampling technique with a start at any randomly selected item. The
biggest disadvantage of this type of sampling is that the items in the population
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
45. For attributes sampling, of the three factors that enter into sample size determination, which
two factors can the auditor adjust to reflect the importance of the control?
46. Which of the following combinations guarantees a larger sample size?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
47. For a large population of cash disbursement transactions, Smith, CPA is testing controls by
using attribute sampling techniques. Anticipating an expected deviation rate of 3 percent, Smith
found from a table that the required sample size is 400 with a tolerable deviation rate of 5
percent and a desired confidence level of 95 percent. If Smith anticipated an expected deviation
rate of only 2 percent but wanted to maintain the same tolerable deviation rate and confidence
level, the sample size would be closest to
48. In nonstatistical sampling for tests of controls, increasing the desired confidence level
results in a
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
49. To determine the sample size for a test of controls, an auditor should consider the tolerable
deviation rate, the desired confidence level, and the
50. Which of the following statements is correct concerning statistical sampling in tests of
controls?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
51. For an attributes sampling plan, the tolerable deviation rate is 4%, the computed upper
deviation rate is 7%, the sample deviation rate is 3%, and the risk of assessing control risk too
low is 5%. Which of the following is true?
52. Which of the following risks is related to effectiveness of testing?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
53. Which of the following risks is related to efficiency of testing?
54. The term precision relates to
55. Audit sampling is commonly used for which type of audit evidence?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
56. Audit sampling is not used for which type of audit evidence?
57. Why must an auditor use sampling? What tradeoffs occur when an auditor uses sampling?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
58. “Technology has steadily reduced the number of situations in which audit sampling is
necessary and in the future technology will probably eliminate the need for auditors to rely on
sampling.” Defend or refute the preceding statement.
59. Define Type I and Type II errors.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
60. Define sampling risk and nonsampling risk.
61. When determining the sample size of accounts receivable to test, what are three factors that
are important for you to consider?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
62. Your manager, Sally, believes that nonstatistical sampling is the best method to use on the
audit of YaYa Corporation. You, however, believe that statistical sampling is by far the best
method. In addition, you have a great deal of training in the proper use of sampling techniques.
Prepare an argument to convince Sally why statistical sampling should be used.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
63. Indicate which of the following audit procedures, used as tests of controls, do not involve
audit sampling.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
64. For a particular audit, the sample size for testing controls over the revenue cycle is
relatively large. What can you infer about the desired confidence level, the tolerable deviation
rate, and the expected population deviation rate?
65. Before performing sampling procedures in an audit of controls, Sue set the tolerable
deviation rate at 4.0%. After the procedures, she computes a computed upper deviation rate of
5.4%. What can Sue conclude about the client’s controls?
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
66. Your uncle Bob, a CPA, has recently started auditing and he wants your advice on some
tests of sales transactions he is conducting. Bob selected a haphazard sample of 15 sales with a
total book value of $75,000. In his sample, he found a total of $500 in net overstatement errors.
The total sales balance per book is $10,000,000. Overall materiality for the engagement is
$300,000. Tolerable misstatement for sales is $70,000. If the sample results indicate that Bob’s
best estimate of total misstatement in sales is $35,000, can Bob safely conclude that no
additional work is needed in this area? Include in your answer a clear discussion of how sample
results are compared to tolerable misstatement.
Chapter 08 – Audit Sampling: An Overview and Application to Tests of Controls
67. Identify the types of audit evidence that are tested using audit sampling techniques.