Auditing: Statistical Sampling and Substantive Procedures
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Questions and Answers

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?

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

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

<p>It is increased (C)</p> Signup and view all the answers

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

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

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

<p>That a material misstatement does not exist when, in fact, it does. (C)</p> 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?

<p>Population (B)</p> 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?

<p>Non-sampling Risk (A)</p> Signup and view all the answers

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

<p>To evaluate a representative portion of the population (B)</p> 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?

<p>Sampling Risk (B)</p> 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?

<p>Audit Sampling (C)</p> 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?

<p>To ensure separate consideration of these items (D)</p> 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?

<p>Sampling risk (D)</p> 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?

<p>To select the sample items (A)</p> Signup and view all the answers

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

<p>90% (D)</p> Signup and view all the answers

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

<p>Select the random starting point (C)</p> Signup and view all the answers

What is the purpose of projecting misstatements in audit sampling?

<p>To estimate the total misstatement in the population (C)</p> Signup and view all the answers

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