AUDITING RMU
11th Edition
ISBN: 9781260934830
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 8, Problem 8.19MCQ
To determine
Introduction:
Tolerable Rate is defined as the maximum rate of acceptability of misstatement. It’s the largest variance accepted in audit sampling in order to rely upon a specific control.
Expected Population Deviation Rate is the rate expected to exist in the population. The expected deviation rate represents the auditor's best estimate of the actual failure rate of a control in a population.
Allowance for Sampling Risk can be defined as uncertainties associated with sampling. It is the difference between tolerable deviation and mean of population.
To describe: Relationship between tolerable deviation and expected deviation plus allowance risk.
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Students have asked these similar questions
Explain how the following test of control will affect the sample size?
a. An increase in the extent to which the auditor's risk assessment takes into account relevant controls
b. An increase in the tolerable rate of deviation
c. An increase in the expected rate of deviation of the population to be tested
The 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.
When using sampling in the study of internal control, the audit team would compare theupper limit rate of deviation to thea. Expected population deviation rate.b. Sample rate of deviation.c. Statistical rate of deviation.d. Tolerable rate of deviation
Chapter 8 Solutions
AUDITING RMU
Ch. 8 - Prob. 8.1RQCh. 8 - Prob. 8.2RQCh. 8 - Prob. 8.3RQCh. 8 - Prob. 8.4RQCh. 8 - Prob. 8.5RQCh. 8 - Prob. 8.6RQCh. 8 - Prob. 8.7RQCh. 8 - Prob. 8.8RQCh. 8 - Prob. 8.9RQCh. 8 - Prob. 8.10RQ
Ch. 8 - Prob. 8.11MCQCh. 8 - Prob. 8.12MCQCh. 8 - Prob. 8.13MCQCh. 8 - Prob. 8.14MCQCh. 8 - Prob. 8.15MCQCh. 8 - Prob. 8.16MCQCh. 8 - Prob. 8.17MCQCh. 8 - Prob. 8.18MCQCh. 8 - Prob. 8.19MCQCh. 8 - Prob. 8.20MCQCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.22PCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.25PCh. 8 - Prob. 8.26PCh. 8 - Prob. 8.27PCh. 8 - Prob. 8.28PCh. 8 - Prob. 8.29PCh. 8 - Prob. 8.30PCh. 8 - Prob. 8.31P
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- 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 TRUEarrow_forwardWhich of the following best describes the method of determining the ULRD?a. Expected population deviation rate + Allowance for sampling risk.b. Risk of underreliance + Allowance for sampling risk.c. Sample rate of deviation + Allowance for sampling risk.d. Tolerable rate of deviation + Allowance for sampling risk.arrow_forwardWhen evaluating the results of an MUS application, the audit team should compare the upper limit on misstatements to thea. Expected misstatement.b. Incremental allowance for sampling risk.c. Projected misstatement.d. Tolerable misstatement.arrow_forward
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- Which of the following statements is correct about monetary unit sampling?a. The risk of incorrect acceptance must be specified.b. Smaller logical units have a higher probability of selection in the sample than larger units.c. Each logical unit in the population has an equally likely chance of being selected in the sample.d. The projected misstatement cannot be calculated when one or more misstatements are discovered.arrow_forwardSTATEMENT 1: The choice between a statistical and a nonstatistical sampling plan is based primarily on the auditor's assessment of the relative costs and benefits. STATEMENT 2: The choice between a statistical and a nonstatistical sampling plan is made independent of the selection of audit procedures. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correctarrow_forwardWhich of the following combinations results in an increase in sample size in an attribute sample? a. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Decrease Decrease Increase b. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Decrease Increase Decrease c. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Increase Increase Decrease d. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Increase Increase Increase e. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Increase Decrease Increasearrow_forward
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