STATEMENT 1: In an audit sampling application, detection risk arises from the uncertainties of nonsampling risk and sampling risk. STATEMENT 2: Non sampling risk can be reduced to an acceptably low level by a 100% examination of the account balance or transaction class. A. Only Statement 1 is incorrect B. Only Statement 1 is correct O C. Both statements are incorrect D. Both statements are correct

STATEMENT 1: In an audit sampling application, detection risk arises from the uncertainties of nonsampling risk and sampling risk. STATEMENT 2: Non sampling risk can be reduced to an acceptably low level by a 100% examination of the account balance or transaction class. A. Only Statement 1 is incorrect B. Only Statement 1 is correct O C. Both statements are incorrect D. Both statements are correct

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

s1: A stratified sample consist of sampling units selected without conscious bias. s2: All auditing procedures involve audit sampling. s3: A deviation from prescribed control procedures does not necessarily indicate the presence of monetary error A. all statements are true b. all statements are false c. s1 and s2 are true d. s1 and s3 are true
1
STATEMENT 1: If the sampling unit is defined as the individual disbursement entry in the check register, the sampling frame would be the check voucher and its supporting documents. A STATEMENT 2: Not all audit tests applied to less than 100% of the populatian are considered audit sampling applications. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
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.
Q5) Audit sampling is used in conjunction with many audit tests, and may be performed on a statistical or nonstatistical basis.a. Define the term audit sampling.b. List and explain two advantages of the use of statistical sampling as compared to non statistical sampling.
7. Analytical procedures: A. are not a type of audit evidence. B. are not required during the completion phase of the audit. C. performed during the planning phase of the audit are used as a substantive test in support of account balances. D. do not provide reliable evidence unless it is corroborated with other evidence. 8. Reasonable assurance allows for: A. low likelihood that material misstatements will not be prevented or detected by internal controls. B. no likelihood that material misstatements will not be prevented or detected by internal controls. C. moderate likelihood that material misstatements will not be prevented or detected by internal controls. D. high likelihood that material misstatements will not be prevented or detccted by internal controls. 9. Management implements internal controls to ensure that all required footnote disclosures are accurate. Auditors tests those controls to provide evidence supporting the presentation. A. completeness and valuation B.…
STATEMENT 1: Nonstatistical sampling approach is determined based on pure judgment of the auditor. STATEMENT 2: The maximum rate of deviation that would support the auditor's planned assessed level of control risk is the expected error rate. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
What is “tolerable misstatement”? How is this concept applied when auditors perform audit tests on a sample?
In an audit sampling application, an auditora. Performs procedures on all items in a balance and makes a conclusion about the entirebalance.b. Performs procedures on less than 100 percent of the items in a balance and formulates aconclusion about the entire balance.c. Performs procedures on less than 100 percent of the items in a class of transactions tobecome familiar with the client’s accounting system.d. Performs analytical procedures on the client’s unaudited financial statements when planning the audit.
STATEMENT 1: Since audit sampling is an essential part of the audit process, each step in an audit sampling application should be adequately planned. STATEMENT 2: No sampling method can provide the auditor with an absolute assurance that a particular sample is perfectly representative of the population. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
Which of the following statements is not true with respect to the calculation of the upperlimit on misstatements?a. The tainting percentage is determined based on the difference between the recorded balance and the audited value.b. A separate incremental allowance for sampling risk is calculated for each misstatementdiscovered by the auditor.c. If no misstatements are detected, the basic allowance for sampling risk equals zero.d. The projected misstatement is determined by multiplying the sampling interval by thetainting percentage.
State with reasons (in short) whether the following statements are correct or incorrect (a) The terms of audit engagement can restrict the scope of an audit. · (b) It is the function of an audit to establish that payments have been made validly to the persons who are shown to be recipients. (c) Letter of Representations received from Management relieve the auditors of their responsibility. (d) Stratified sampling method involves dividing the whole population to be tested in a few separate groups. (e) There is a very thin difference between advocacy threats and intimidation threats to an auditor while performing his duty