Obtain an understanding of the client’s external controls. All things equal, as the risk of assessing control risk too low____________; sample size________________: a. Increases; decreases b. Increases; increases c. None d. Decreases; decreases

Obtain an understanding of the client’s external controls. All things equal, as the risk of assessing control risk too low; sample size____: a. Increases; decreases b. Increases; increases c. None d. Decreases; decreases

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Random variables, which are usually generated from experiments in which the observations or things…

A: A variable is basically regarded as the symbol for the working at the time, when the placeholder…

Q: Statistical sampling cannot be used to test all control activities Select one: True False

A: An audit is a process of checking and verifying the books of account and financial information of…

Q: Statistical sampling cannot be used to test all control activities Select one: True False

A: Solution:- Introduction:- Sampling means :- Sampling is a technique used by the auditor during the…

Q: 2. Which of the following is not true about the advantages of statistical sampling approach? * A.…

A: Correct option is B. Sample findings are evaluated in a more scientific way. Explanation:

Q: You and a friend are studying audit sampling together. Your friend is having a hard time…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Which of the following increase control risk?

A: The answer for the multiple choice question and relevant explanation are presented hereunder : What…

Q: • The Choose the answer from the menu in accordance to the question statement _--- method includes…

A: There are many two types of sampling approaches used when auditing the financial statement of the…

Q: What is the effect on sample size for substantive procedures of an increase in the total error that…

A: The lower the reliance on the results of a substantive procedure using audit sampling, the higher…

Q: Which one of the sentences below is FALSE? A. The risk of incorrect acceptance called beta risk has…

A: Auditing means the independent checking of company operation by outsider. Auditor is qualified and…

Q: Which one is not an advantage of the sensitivity analysis? A. To make contingency plans B. To adjust…

A: Some important factors are changeable and unpredictable in future like interest rates, cashflows,…

Q: 7. Auditors use sampling in performing tests of controls and ______________ Question 7…

A: In audit sampling, the auditor tests all the data on sample basis. The analytical audit procedures…

Q: Which is most likely when the assessed level of control risk increases? Use larger sample sizes for…

A: Control risk refers to the risk that a company's internal controls may not prevent or detect errors…

Q: The likelihood that an identified precision interval contains the true (but unknown) population…

Q: If the tests of controls indicate certain controls are not as effective as the auditor originally…

A: Test of controls are performed to determine the effectiveness of the control to detect and correct…

Q: 3. Sample results may not be truly representative of a population due to A. Sampling risks B.…

A: sample results may not be truly representative of a population due to: 1. Sampling risks 2. Sampling…

Q: s1: The only way to know with certainty whether a sample Is representative is to subsequently audit…

A: Option (c) is the correct answer i.e. s1 and s2 are true

Q: The maximum amount of error in a population that the auditor is willing to accept is referred to as…

A: Acceptable risk is the auditor’s level of risk that they are willing to accept to release an…

Q: QUESTION 28 The kind of analysis that consists of rerunning the model to determine the effect on the…

A: There are various financial model used to analyze data.

Q: During the control function, the measurements taken of the performance must be accurate enough to…

A: In a corporation, control seems to be a major goal-oriented function of management. This is the…

Q: As the desire decreases for a given materiality amount, the sample size necessary to test an…

A: Auditing and Assurance

Q: the procedures used to test the effectiveness of controls in support of a reduced assessed control…

A: Auditors generally test operating effectiveness of controls selected for testing by analysing that…

Q: Sampling, rather than surveying an entire population, can offer some substantial benefits. Some of…

A: involves selecting a subset of a population to represent the entire population. The subset that is…

Q: In which of the following situations would an auditor most likely choose a substantive strategy and…

A: An auditor is most likely to adopt substantive strategy and avoid sampling transactions to test…

Q: Experimental outcomes that are based on measurement scales such as time, weight, and distance can be…

A: The correct answer is: (C) Continuous Continuous random variables are variables that can take on…

Q: Which one of the following is the main problem with using non-probability sampling technique? a. The…

A: Nonprobability sampling is a technique where the samples are selected without the random selection…

Q: An unbiased estimator is one that: A) has the most observations B is on target on average.

A: It is the estimator where the expected value of a given parameter is equal to the true value of the…

Q: In an environment that is highly automated, an auditor determines that it is not possible toreduce…

Q: Select one:

A: In this question, we have to find out from the given options which one is not the option of data…

Q: What are the risks if the auditor concludes controls are operating effectively based on the sample…

A: Definition: Sampling risk: Sampling risk is a risk that arises when the judgments based on the…

Q: In determining the sample size for a test of controls, an auditor should consider the expected…

A: Audit is the process of checking and verifying the books of account of the business in order to…

Q: The audit team will choose to reduce the reliance on controls if the _____ is greater than the…

A: The audit team will choose to reduce the reliance on controls if the upper limit rate of deviation…

Q: 3. Risk registers would normally detail which of the following: (Select all that apply.) A. Risk…

A: Risk registers are used to keep a track of the risks and other setbacks in a project and how to…

Q: Which of the following combinations results in an increase in sample size in an attribute sample?…

A: Auditor uses statistical sampling to perform test controls on large population data for quantifying…

Q: When Kayla discovered she had a client with high inherent risk and high control risk how did she set…

A: There are three types of risks involved in the audit process. Inherent risk, control risk and…

Question

Obtain an understanding of the client’s external controls. All things equal, as the risk of assessing control risk too low____________; sample size________________:

Increases; decreases

Increases; increases

None

Decreases; decreases

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1Basic Information

VIEW

Step 2 Solution

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The more assurance the auditor wants, _______. A. the less representative a sample should be of the population, and the more testing the auditor needs to do B. the more representative a sample should be of the population, but the less testing the auditor needs to do to gain efficiency C. the more representative a sample should be of the population, and the more testing the auditor needs to do D. the less representative a sample should be of the population, and the less testing the auditor needs to do
An advantage of statistical sampling over nonstatistical sampling methods is that statistical methodsa. Afford more assurance than a nonstatistical sample of equal size.b. Provide an objective basis for quantitatively evaluating sampling risk.c. Can more easily convert the sample into a dual-purpose test useful for substantive procedures.d. Eliminate the need to use judgment in determining appropriate sample sizes
Variables sampling plans focus on a. Rates of deviation from prescribed control procedures. b. Assessing the effective operation of management's controls. c. The risk of assessing control risk too high. d. Monetary balances.
In determining the tolerable deviation rate for a test of controls, the auditors consider: Their planned assessed level of control risk. The sample size. The nature of the test. The expected deviation rate in the population.
Suppose you're given a data set that classifies each sample unit into one of four categories: A, B, C, the data as A = 1, B=2, C = 3, and D=4. Are the data consisting of the classifications A, B, C, and D or quantitative? Are the data consisting of the classifications A, B, C, and D qualitiative or quantitative? OA. Qualitative, because they are measured on a naturally occuring numerical scale. B. Quantitative, because they are measured on a naturally occuring numerical scale. C. Quantitative, because they can only be classified into categories. D. Qualitative, because they can only be classified into categories. *** After the data are input as 1, 2, 3, or 4, are they qualitative or quantitative? OA. Qualitative, because they cannot be meaningfully added, subtracted, multiplied, or divided. B. Qualitative, because they are measured on a naturally occurring numerical scale. OC. Quantitative, because they are measured on a naturally occurring numerical scale. OD. Quantitative, because…
If the _______ exceeds the _______, the audit team would decide to rely on internal control as planned and maintain control risk at planned levels.a. ULRD; tolerable rate of deviation.b. tolerable rate of deviation; ULRD.c. expected population deviation rate; tolerable rate of deviation.d. tolerable rate of deviation; expected population deviation rate.
13. Under the sampling method the term __________ is used for the entire group for which we want to draw conclusions. a. Probability b. Non-Parametric c. Population d. Sample
Which of the following statements about attribute sampling is correct? A. Larger transactions have a higher chance of being selected into the sample than smaller transactions. B. The risk of over-reliance does not affect the sample size. C. Attribute sampling is often used in the test of controls. D. The haphazard selection method is often used for attribute sampling. E. If the estimated population deviation rate is higher than the tolerable deviation rate, auditors conclude the internal control is effective.
The sample size of the test of controls varies directly with: Expected Population Deviation Rate Tolerable Rate Risk of Assessing Control Risk Too Low A. Yes Yes No B. No No Yes C. Yes No No D. No Yes Yes E. Yes Yes Yes A B C D E
If there is a detection of one control deviation, the auditor can do which of the following? a. Increase the sample size O b. Test a compensation control Oc. Amend the auditor's decision to rely on the control O d. All of the above are options for an auditor responding to detection of a control deviatic
Matching Type: Choose appropriate controls with the given possible frauds and errors.- You can choose multiple controls for 1 number of possible errors and controls - controls already answered from preceding number can still be answered for succeeding number.
Non-sampling risk, and more specifically the risk of assessing control risk too low (risk of overreliance), cannot be eliminated, but it can be controlled. TRUE OR FALSE? WHY?