You and a friend are studying audit sampling together. Your friend is having a hard time understanding the various aspects of risk associated with attribute sampling and has put together the following list of questions she wants to discuss with you. Answer each question. a. What is: ■Audit risk? ■Inherent risk? ■Control risk? ■Controllable risk? ■Residual risk? b. What is sampling risk? How is sampling risk controlled? c. What are the two aspects of sampling risk that an internal auditor is concerned with when testing controls? Briefly describe each aspect. d. What is nonsampling risk? How is nonsampling risk controlled?
You and a friend are studying audit sampling together. Your friend is having a hard time understanding the various aspects of risk associated with attribute sampling and has put together the following list of questions she wants to discuss with you. Answer each question. a. What is: ■Audit risk? ■Inherent risk? ■Control risk? ■Controllable risk? ■Residual risk? b. What is sampling risk? How is sampling risk controlled? c. What are the two aspects of sampling risk that an internal auditor is concerned with when testing controls? Briefly describe each aspect. d. What is nonsampling risk? How is nonsampling risk controlled?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You and a friend are studying audit sampling together. Your friend is having a hard time understanding the various aspects of risk associated with attribute sampling and has put together the following list of questions she wants to discuss with you. Answer each question.
a. What is:
■Audit risk?
■Inherent risk?
■Control risk?
■Controllable risk?
■Residual risk?
b. What is sampling risk? How is sampling risk controlled?
c. What are the two aspects of sampling risk that an internal auditor is concerned with when testing controls? Briefly describe each aspect.
d. What is nonsampling risk? How is nonsampling risk controlled?
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