Results Reporter

Out of 23 questions, you answered 14 correctly with a final grade of 61%

14 correct (61%)

9 incorrect (39%)

0 unanswered (0%)

Your Results:

The correct answer for each question is indicated by a This is the correct answer..

1 INCORRECT

Which of the following is true regarding technological advances and auditing?

A) A well-controlled, automated accounting system that processes routine transactions

with few errors can reduce the number of times auditors need to utilize sampling techniques in an audit.

B) A well-controlled, automated accounting system that processes routine transactions

with few errors can eliminate the number of times auditors need to utilize sampling techniques in an
audit.

C) Powerful audit software (e.g. ACL) has eliminated the need for sampling in an audit.

D) Technology, though not there yet, will eventually eliminate the need for auditors to rely
on sampling in an audit.

2 CORRECT

The risk of incorrect rejection is associated with

A) Inherent risk.

B) Engagement risk.

C) Sampling risk.

D) Audit risk.

3 CORRECT

Which of the following best illustrates the concept of sampling risk?

 A) An auditor may select audit procedures that are not appropriate to achieve the specific
objective.

B) A randomly chosen sample may not be representative of the population as a whole on

the characteristic of interest.

C) An auditor may fail to recognize errors in the documents examined for the chosen
sample.

D) The documents related to the chosen sample may not be available for inspection.

4 INCORRECT

The likelihood of assessing control risk too high is the risk that the sample selected to test controls

A) Does not support the auditors planned assessed level of control risk when the true
operating effectiveness of the control justifies such an assessment.

B) Does support the auditors planned assessed level of control risk when the true
operating effectiveness of the control does not justify such an assessment.

C) Contains misstatements that could be material to the financial statements when

aggregated with misstatements in other account balances or transaction classes.

D) Contains proportionately fewer monetary errors or deviations from prescribed internal

controls than exist in the balance or class as a whole.

5 CORRECT

Which of the following has an inverse relationship to sample size:

A) Desired level of confidence.

B) Expected population deviation rate.

C) Tolerable deviation rate.

D) All of the above.

6 CORRECT

As a result of sampling procedures applied as tests of controls, an auditor incorrectly assesses control
risk (CR) lower than appropriate. The most likely explanation for this situation is that

A) The deviation/failure rates of both the auditors sample and the population exceed the
tolerable deviation rate (TDR).
 B) The deviation/failure rate in the auditors sample is less than the TDR, but the
deviation/failure rate in the population exceeds the TDR.

C) The deviation/failure rate in the auditors sample exceeds the TDR, but the
deviation/failure rate in the population is less than the TDR.

D) The deviation/failure rates of both the auditors sample and the population are less than
the TDR.

7 INCORRECT

What is an auditors evaluation of a statistical sample for attributes when a test of 50 documents results
in three deviations if the tolerable deviation rate is 7 per cent, the expected population deviation rate is
5 per cent, and the allowance for sampling risk is 2 per cent?

A) The planned assessed level of control risk should be modified because the tolerable
deviation rate plus the allowance for sampling risk exceeds the expected population deviation rate.

B) The sample results should be accepted as support for the planned assessed level of
control risk because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable
deviation rate.

C) The sample results should be accepted as support for the planned assessed level of
control risk because the tolerable deviation rate less the allowance for sampling risk equals the expected
population deviation rate.

D) The planned assessed level of control risk should be modified because the sample
deviation rate plus the allowance for sampling risk exceeds the tolerable deviation rate.

8 INCORRECT

As a result of sampling procedures applied as tests of controls, an auditor incorrectly assesses control
risk lower than appropriate. The most likely explanation for this situation is that

A) The deviation rates of both the auditors sample and the population exceed the tolerable
deviation rate.

B) The deviation rates of both the auditors sample and the population are less than the
tolerable deviation rate.

C) The deviation rate in the auditors sample is less than the tolerable deviation rate, but
the deviation rate in the population exceeds the tolerable deviation rate.

D) The deviation rate in the auditors sample exceeds the tolerable deviation rate, but the
deviation rate in the population is less than the tolerable deviation rate.
9 CORRECT

Which of the following types of evidence is most likely to utilize sampling?

A) Scanning.

B) Confirmation.

C) Observation.

D) Analytical procedures.

10 CORRECT

For which of the following audit tests would an auditor most likely use attribute sampling?

A) Observation of employees who control mailroom receipts.

B) Examining supporting documentation for purchases for evidence of proper

authorization.

C) Examining invoices in support of the valuation of equipment additions.

D) Selected accounts receivable for confirmation of account balances.

11 CORRECT

Which of the following types of statistical testing is likely to be used for a test of controls?

A) Monetary-unit sampling.

B) Probability-proportional-to-size sampling.

C) Attribute sampling.

D) Classical variables sampling.

12 CORRECT

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an
auditor to

A) Eliminate the risk of non-sampling errors.

B) Reduce audit risk and materiality to a relatively low level.

C) Measure the sufficiency of the evidence obtained.

D) Minimize the failure to detect errors and fraud.

13 INCORRECT

Samples to test internal controls are intended to provide a basis for an auditor to conclude whether

A) The controls are operating effectively.

B) The financial statements are materially misstated.

C) The risk of incorrect acceptance is too high.

D) Materiality for planning purposes is at a sufficiently low level.

14 INCORRECT

An auditor plans to examine a sample of 40 accounts payable invoices for proper approval as prescribed
by the entitys internal accounting control procedures. One of the invoices in the chosen sample cannot
be found, and the auditor is unable to use alternative procedures to determine whether the invoice was
properly approved. The auditor should

A) Choose another invoice to replace the missing one in the sample.

B) Consider this compliance test invalid and proceed with substantive tests because
internal control cannot be relied upon.

C) Treat the missing invoice as a deviation for the purpose of evaluating the sample.

D) Select a completely new random set of 40 invoices.

15 CORRECT

Which of the following statements is true in an attribute sampling plan where the tolerable deviation
rate is 7 per cent, the computed upper deviation rate is 6.5per cent, the sample deviation rate is 2 per
cent, and the risk of assessing control risk too low is 5 per cent?

A) The auditor is likely to increase control risk because the computed upper deviation rate
is less than the risk of assessing control risk too low.

B) The auditor is likely to decrease control risk because the computed upper deviation rate
is less than the risk of assessing control risk too low.

C) The auditor is likely to determine that the results do not support reliance on the control
because the computed upper deviation rate plus the sample deviation rate is greater than the tolerable
deviation rate.

D) The auditor is likely to determine that the results do support reliance on the control
because the computed upper deviation rate is less than the tolerable deviation rate.
16 INCORRECT

Which of the following best illustrates the components that make up the upper deviation rate [UDR]?

A) Sample deviation rate + allowance for sampling risk.

B) Sample deviation rate + risk of assessing control risk too high.

C) Tolerable deviation rate + allowance for sampling risk.

D) Expected population deviation rate + allowance for sampling risk.

17 CORRECT

When assessing the tolerable deviation rate (TDR), the auditor should consider that while deviations
from control procedures increase the risk of material misstatements, such deviations may not necessarily
result in errors. This explains why

A) Deviations from examined control procedures at a given rate would normally be

expected to result in a higher rate of dollar errors.

B) A recorded disbursement that is properly authorized may nonetheless contain a material

dollar error.

C) A recorded disbursement that is not properly authorized may nonetheless be recorded

properly in the cash disbursements journal.

D) Deviations would result in dollar errors in the accounting records only when they
occurred in different transactions.

18 CORRECT

When assessing the tolerable deviation rate, the auditor should consider that, while deviations from
control procedures increase the risk of material misstatements, such deviations do not necessarily result
in misstatements. This explains why

A) A recorded disbursement that does not show evidence of required approval may
nevertheless be a transaction that is properly authorized and recorded.

B) Deviations would result in errors in the accounting records only if the deviations and the
misstatements occurred on different transactions.

C) Deviations from pertinent control procedures at a given rate ordinarily would be

expected to result in misstatements at a higher rate.

D) A recorded disbursement that is properly authorized may nevertheless be a transaction

that contains a material misstatement.
19 CORRECT

In the evaluation of this sample, the auditor decided to increase the level of the preliminary assessment
of control risk because the

A) Tolerable deviation rate (7 per cent) was less than the computed upper deviation rate (8
per cent).

B) Expected population deviation rate (7 per cent) was more than the percentage of errors
in the sample (3 per cent).

C) Computed upper deviation rate (8 per cent) was more than the percentage of errors in
the sample (3 per cent).

D) Expected population deviation rate (2 per cent) was less than the tolerable deviation
rate (7 per cent).

20 CORRECT

Based on the information above, the planned allowance for sampling risk was

A) 5 per cent.

B) 4 per cent.

C) 3 per cent.

D) 1 per cent.

21 CORRECT

Which of the following statements is correct concerning statistical sampling in tests of controls?

A) Deviations from controls at a given rate usually result in misstatements at a higher rate.

B) As the population size doubles, the sample size should also double.

C) The qualitative aspects of deviations are not considered by the auditor.

D) There is an inverse relationship between the sample size and the tolerable deviation
rate.

22 INCORRECT

Which of the following statements is true regarding non-statistical sampling?

A) It quantifies the auditors exposure to sampling risk.

B) Its use is required for small entities by auditing standards.

 C) Sample sizes for non-statistical sampling should be comparable to statistical sampling.

D) It gives greater assurance than statistical sampling that samples are randomly selected.

23 INCORRECT

Most of the steps for planning and carrying out a non-statistical test of controls are the same as those for
a statistical test of controls. Which of the following represent the steps that could differ between non-
statistical and statistical sampling as discussed in the text?

A) Defining the control deviation conditions, determining the sample size, calculating the
upper deviation rate.

B) Defining the control deviation conditions, defining the sampling unit, calculating the
computed upper deviation rate.

C) Determining the sample size, selecting the sample items, calculating the computed
upper deviation rate.

D) Defining the sampling unit, selecting the sample items, performing the audit procedures.

E-mail Your Results

Date: Sun Jul 30 2017 12:04:14 GMT-0400 (Eastern Daylight Time)

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Godfrey Mbonu

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