Term
Which of the following is an example of Sampling Risk?
a. improperly assessing the risk of material messtatement
b. Testing the wrong population to achieve the audit objective
c. Selecting a sample that is not representative of the population
d. Inaccurately identifying misstatements in a sample |
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Definition
| C. selecting a sample that is not representative of the population |
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Term
An adv. of using stat. sampling techniques is that such techniques:
a. mathematically measure risk
b. eliminate the need for judgmental decisions
c. define the values of precision and reliability required to provide audit satisfaction
d. have been established in the courts to be superior to judgmental sampling |
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Definition
| a. Mathematically measure risk |
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Term
An auditor selects a stat sample from a large inv. of replacement parts. Which of the following audit objectives would be most appropriate if the sampling method used is MUS?
a. the auditor plans to est. the age of individual inv. items
b. the auditor plans to make a statement concerning the total dollar amt of misstatement in the population from the recorded book value.
c. the auditor wishes to accept or reject the hypothesis that the proportion of defective parts in the pop is less that 5%
d. the auditor wishes to est. the proportion of defective parts in the pop. |
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Definition
| B. The auditor plans to make a statement concerning the total dollar amt of misstatement in the pop from the recorded book value |
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Term
Which of the following best describes an inherent limitation of the MUS method?
a. the upper error estimate of misstatements tends to be conservative.
b. it is complication and always requires teh use of a computer system to perform the calcs
c. errors must be large in order to project most likely misstatements.
d. a great deal of effort is focused on the large dollar value items. |
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Definition
| A. The upper error estimate of misstatements tends to be conseravtive |
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Term
Which of the following would not be an appropriate use of GAS?
a. developing an aging report of accts rec.
b. reading a complete master file for an overall integrity review
c. reading a flie to select accts rec. transactions over 5k and over 30 days past due for subsequent audit analysis
d. submitting transactions to be tagged and traced through the comp system |
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Definition
| D. submitting transactions to be tagged and traced through the comp system |
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Term
Which of the following procedures is LEAST LIKELY to be performed by an auditor using GAS?
a. selection and printing of accts rec. confirmations from a client's master file
b.evaluation of the audit results based on a stat sample of inventory
c. calculating an estimate of the allowance for doubtful accts
d. identification adn selection of inventory items with characteristics that the auditor believes indicate obsolete inventory |
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Definition
| C. Calculating an estimate of allowance for doubtful accounts |
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Term
The Auditor wishes to test the assertion related to the existence of accts rec. Which of the following would be the best approach to gathering the audit evidence?
a. take an attribute sample of shipping docs and trace to invoices.
b. take an attribute sample of invoices and review to see that credit was properly reviewed
c. Take a MUS sample and send confirmations to customers
d. use analytical procedures and devlop an aging of receivables adn compare to the aging analysis from last year to determine whether the differences are material |
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Definition
| C. Take a MUS sample and send confirmations to customers |
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Term
Which of the following statements are correct regarding sampling and nonsampling risk?
I. Nonsampling risk is best addressed through staff training and supervisions
II. Sampling risk is set in advance by the auditor as a basis for determining sample size
III. Nonsampling risk can be minimized by taking larger samples
a. i
b. I and II
C. II and III
D. III |
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Definition
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Term
Analytical procedures are best used as a substantive audit procedure in which of the following scenarios?
a. the auditor's primary objective is to reduce audit costs to a minimum
b. internal control risk is high, and it does not make sense to test controls
c. preliminary analytical review indicates that there are likely to be misstatements in sig acct balances.
d. None |
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Definition
| D. None (All are good scenarios)! |
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