Auditing: Statistical Sampling and Substantive Procedures

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What is the primary consideration when determining the extent of substantive procedures?

Risks of material misstatement (correct)
Monetary-unit sampling technique
Tolerable misstatement or deviation rate
Operating effectiveness of internal control

What is the purpose of using confidence factors in audit sampling?

To determine the sample size (correct)
To select physical units for testing
To reduce the risks of material misstatement
To increase the level of risk reduction

What is the benefit of testing the operating effectiveness of internal control?

It improves the accuracy of audit sampling
It reduces the sample size required
It increases the risks of material misstatement
It reduces the extent of substantive procedures (correct)

What is the characteristic of monetary-unit sampling?

Selection is based on the monetary value of the item (A) Signup and view all the answers

What happens to the extent of substantive procedures if the results of testing internal control are unsatisfactory?

It is increased (C) Signup and view all the answers

What is the relationship between the confidence factor and sample size in audit sampling?

Higher confidence factor, larger sample size (A) Signup and view all the answers

What is the primary concern of an auditor when it comes to sampling risk?

That a material misstatement does not exist when, in fact, it does. (C) Signup and view all the answers

What is the term for the entire set of data from which a sample is selected and about which the auditor wishes to draw conclusions?

Population (B) Signup and view all the answers

What is the risk that the auditor reaches an erroneous conclusion for any reason not related to sampling risk?

Non-sampling Risk (A) Signup and view all the answers

What is the purpose of selecting a sample in audit sampling?

To evaluate a representative portion of the population (B) Signup and view all the answers

What is the risk that the auditor's conclusion based on a sample may be different from the conclusion if the entire population were subjected to the same audit procedure?

Sampling Risk (B) Signup and view all the answers

What is the term for the selection and evaluation of less than 100 percent of the population of audit relevance?

Audit Sampling (C) Signup and view all the answers

What is the primary purpose of removing high-value and key items from the population during the sampling process?

To ensure separate consideration of these items (D) Signup and view all the answers

What is the term for the chance that an audit sample will not detect a material misstatement that exists in a population?

Sampling risk (D) Signup and view all the answers

In a sample of 50 items from a population of 250,000, what is the purpose of calculating the sampling interval?

To select the sample items (A) Signup and view all the answers

What is the confidence level that corresponds to a confidence factor of 2.3?

90% (D) Signup and view all the answers

What is the next step after calculating the sampling interval in the audit sampling process?

Select the random starting point (C) Signup and view all the answers

What is the purpose of projecting misstatements in audit sampling?

To estimate the total misstatement in the population (C) Signup and view all the answers