Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 8, Problem 15CYBK
To determine
Introduction: Tolerable deviation rate means the rate of variance observed during audit , which is acceptable to the extent that it would not affect the auditing results , materially.
To select: The statement which is false.
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Which one of the sentences below is FALSE?
A.
The risk of incorrect acceptance called beta risk has the consequence that the auditor may assume that the population is free of material misstatement.
B.
The risk of incorrect rejection is called alpha risk and has the consequence that the auditor may assume on the basis of sample results that a population is materially misstated when, in fact, it is not .
C.
The risk of incorrect acceptance is called beta risk.
D.
The risk of incorrect rejection very common in audit sampling is called beta risk.
S1: Mean per unit estimation is a classical variable sampling technique that projects the sample average to the total population by multiplying the sample average by the number of items in the population. S2: The more the auditor is relying on other substantive procedures to reduce to an acceptable level the detection risk regarding a particular population, the less assurance the auditor will require from sampling, and the smaller the sample size can be.
a. BOTH STATEMENTS ARE TRUE
b. BOTH STATEMENTS ARE FALSE
c. ONLY S1 IS TRUE
d. ONLY S2 IS TRUE
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.
Chapter 8 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 8 - Prob. 1CYBKCh. 8 - Prob. 2CYBKCh. 8 - Prob. 3CYBKCh. 8 - Prob. 4CYBKCh. 8 - Prob. 5CYBKCh. 8 - Prob. 6CYBKCh. 8 - Prob. 7CYBKCh. 8 - Prob. 8CYBKCh. 8 - Prob. 9CYBKCh. 8 - Prob. 10CYBK
Ch. 8 - Prob. 11CYBKCh. 8 - Prob. 12CYBKCh. 8 - Prob. 13CYBKCh. 8 - Prob. 14CYBKCh. 8 - Prob. 15CYBKCh. 8 - Prob. 16CYBKCh. 8 - Prob. 17CYBKCh. 8 - Prob. 18CYBKCh. 8 - Refer to Exhibit 8.6. Assume a 5% risk of...Ch. 8 - Prob. 21CYBKCh. 8 - Prob. 22CYBKCh. 8 - Prob. 23CYBKCh. 8 - Prob. 24CYBKCh. 8 - Prob. 25CYBKCh. 8 - Prob. 26CYBKCh. 8 - Prob. 27CYBKCh. 8 - Prob. 28CYBKCh. 8 - Prob. 29CYBKCh. 8 - Prob. 30CYBKCh. 8 - Prob. 31CYBKCh. 8 - Prob. 32CYBKCh. 8 - Prob. 33CYBKCh. 8 - Prob. 34CYBKCh. 8 - Prob. 35CYBKCh. 8 - Prob. 36CYBKCh. 8 - Prob. 37CYBKCh. 8 - Prob. 38CYBKCh. 8 - Prob. 39CYBKCh. 8 - Prob. 1RQSCCh. 8 - Prob. 3RQSCCh. 8 - Prob. 4RQSCCh. 8 - Prob. 5RQSCCh. 8 - Prob. 6RQSCCh. 8 - Prob. 7RQSCCh. 8 - Prob. 8RQSCCh. 8 - Prob. 9RQSCCh. 8 - Prob. 10RQSCCh. 8 - Prob. 11RQSCCh. 8 - Prob. 12RQSCCh. 8 - Prob. 13RQSCCh. 8 - Prob. 14RQSCCh. 8 - Prob. 15RQSCCh. 8 - Prob. 16RQSCCh. 8 - Prob. 17RQSCCh. 8 - Prob. 18RQSCCh. 8 - Prob. 19RQSCCh. 8 - What is stratification? Distinguish between...Ch. 8 - Prob. 21RQSCCh. 8 - Prob. 22RQSCCh. 8 - Prob. 23RQSCCh. 8 - Prob. 24RQSCCh. 8 - Prob. 25RQSCCh. 8 - Prob. 26RQSCCh. 8 - Prob. 27RQSCCh. 8 - Prob. 28RQSCCh. 8 - Prob. 29RQSCCh. 8 - Prob. 30RQSCCh. 8 - Prob. 31RQSCCh. 8 - Prob. 32RQSCCh. 8 - Prob. 33RQSCCh. 8 - Prob. 36RQSCCh. 8 - Prob. 37RQSC
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Similar questions
- The audit team will choose to reduce the reliance on controls if the _____ is greater than the _____a. Tolerable rate of deviation; upper limit rate of deviation.b. Upper limit rate of deviation; tolerable rate of deviation.c. Expected population deviation rate; tolerable rate of deviation.d. Tolerable rate of deviation; expected population deviation rate.arrow_forwardAs the desired level of assurance decreases for a given materiality amount, the sample size necessary to test an assertion becomes greater.1 O True Falsearrow_forwardTolerable error, is the maximum monetary error that the auditor is prepared to accept in the population and still conclude that audit objective has been achieved, is directly related to A.Sample size BAudit risk C.Materiality D.Expected errorarrow_forward
- When the auditors have chosen to test a control, what relationship will the tolerable rate normally have when compared to the expected rate of deviations in the sample? Multiple Choice Exceed. Equal. Be less than. A Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardHigh levels of assurance mean _______. A. lower levels of non-sampling risk that the sample is not representative of the population B. higher levels of non-sampling risk that the sample is not representative of the population C. lower levels of sampling risk that the sample is not representative of the population D. higher levels of sampling risk that the sample is not representative of the populationarrow_forwardIf 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 deviaticarrow_forward
- 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 correctarrow_forwardEach of the following statements contains an error. Describe the error and then correct the statement. (9p) a. For a symmetric distribution, the mean will be smaller than the median. b. When taking SRSs from a large population, larger sample sizes will result in larger standard deviations of x. c. The central limit theorem states that for large n, the shape of the sampling distribution is approximately the shape of the population distribution.arrow_forwardThe sample size of a test of controls varies inversely with: Expected Population Tolerable deviation rate Rate A. Yes Yes B. No No C. Yes No D. No Yesarrow_forward
- Which of the following statements is false? A) Top-stratum items are population items whose book value likely exceed the Sampling Interval and would be all selected for examination and evaluation during the audit. B) Because the auditor knows the full amount of errors in the top stratum (since all items are evaluated), no estimate of errors or projection to the population for the errors in the top stratum is required. C) The auditor's evaluation of the most likely misstatements in the sample reflects the sum of the misstatements from the top-stratum and the projected misstatement derived from the each lower-stratum items D) None of the abovearrow_forwardThe 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 Earrow_forwardThe upper precision limit (CUER) in statistical sampling is(1) the percentage of items in a sample that possess a particular attribute.(2) the percentage of items in a population that possess a particular attribute.(3) a statistical measure, at a specified confidence level, of the maximum rate ofoccurrence of an attribute.(4) the maximum rate of exception that the auditor would be willing to accept inthe population without altering the planned reliance on the attribute.arrow_forward
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