Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 9, Problem 15RQ
To determine
Suggest whether the auditor should consider a deviation of 3% is evenly distributed in the population of the sample 100 items.
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Identify the factors an auditor uses to decide the appropriateARO. Compare the sample size for an ARO of 10% with that of 5%, all other factorsbeing equal.
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.
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
Chapter 9 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - What is a dual-purpose test?Ch. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - What would be the difference between an attributes...Ch. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25RQCh. 9 - Prob. 26RQCh. 9 - Prob. 27RQCh. 9 - Prob. 28RQCh. 9 - Prob. 29QRACh. 9 - Prob. 30QRACh. 9 - Prob. 31QRACh. 9 - Prob. 32QRACh. 9 - Prob. 33QRACh. 9 - Prob. 34QRACh. 9 - Prob. 35QRACh. 9 - Prob. 36QRACh. 9 - Prob. 37AOQCh. 9 - Prob. 37BOQCh. 9 - Prob. 37COQCh. 9 - Prob. 37DOQCh. 9 - Prob. 37EOQCh. 9 - Prob. 37FOQCh. 9 - Prob. 37GOQCh. 9 - Prob. 37HOQCh. 9 - Prob. 37IOQCh. 9 - Prob. 37JOQCh. 9 - Prob. 37KOQCh. 9 - Prob. 37LOQCh. 9 - Prob. 38OQCh. 9 - Prob. 39OQCh. 9 - For each term in the first column below, identify...Ch. 9 - Prob. 41OQCh. 9 - Smith, Inc. Rachel Robertson wishes to use...Ch. 9 - Prob. 43OQCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Prob. 47PCh. 9 - In the audit of Potomac Mills, the auditors wish...Ch. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - Prob. 51PCh. 9 - Prob. 52ITC
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Similar questions
- Assume that Dylan Lee found two deviations in a sample of 90 transactions. Using AICPAsample evaluation tables, Lee determined that the ULRD at a 5 percent risk of overrelianceisa. 2.0 percent.b. 2.2 percent.c. 5.9 percent.d. 6.9 percentarrow_forwardIf the UML or Projected Misstatement in a sampling is $8,000, while the tolerable misstatement is $9,000, what would an auditor likely conclude? A) Since the UML or Projected Misstatement is less than the tolerable misstatement, the account is not materially misstated. B) Since the UML or Projected Misstatement is less than the tolerable misstatement, the account is misstated. C) The analysis has been improperly performed since the UML or Projected Misstatement is unequal to the tolerable misstatementarrow_forwardSample Size Determination. For each of the following independent cases, use AICPA sample size tables to identify the missing value(s). Control 1 2 3 4 Risk of overreliance 5.0% 5.0% 10.0% (d) Expected population deviation rate 1.25% 2.5% (c) 1.25% Tolerable rate of deviation 7.0% (b) 6.0% 6.0% Sample size (a) 68 153 78arrow_forward
- Using AICPA sample evaluation tables, determine the conclusion from a statistical sampleof internal controls when a sample of 125 documents indicates five deviations if the tolerablerate of deviation is 5 percent, the expected population deviation rate is 2 percent, and theallowance for sampling risk is 3 percent.a. Accept the evidence as support for assessing a low control risk because the tolerable rateof deviation less the allowance for sampling risk is less than the expected populationdeviation rate.b. Use the evidence to assess a higher control risk than planned because the sample rate ofdeviation plus the allowance for sampling risk exceeds the tolerable rate of deviation.c. Use the evidence to assess a higher control risk than planned because the tolerable rate ofdeviation plus the allowance for sampling risk exceeds the expected population deviationrate.d. Accept the evidence as support for assessing a low control risk because the sample rate ofdeviation plus the allowance for…arrow_forwardWhich of the following is the exception rate that the auditor expects to find before testing? Sample exception rate Estimated population exception rate Computed exception rate Tolerable exception ratearrow_forwardWhen using monetary unit sampling, a population is accepted as being materially correct when the: Tolerable misstatement is greater than the upper limit on misstatement. Incremental allowance is less than the upper limit on misstatement. Projected misstatement is less than the upper limit on misstatement. Basic precision is greater than the projected misstatement.arrow_forward
- Subject: Auditing & Assurance Principles Define the following factors that affect the determination of sample size: a) Acceptable sampling risk b) Tolerable deviation rate c) Expected deviation rate d) Tolerable misstatement e) Expected misstatement f) Variation in the populationarrow_forwardWhen 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 deviationarrow_forwardPlease answer asaparrow_forward
- The interpretation of the ULRD in an attributes sampling application isa. The estimated rate of deviation in the population with probability equal to the risk ofoverreliance that the population deviation rate is higher.b. The estimated rate of deviation in the population with probability equal to the risk ofoverreliance that the actual rate of deviation is lower.c. The estimated rate of deviation in the population with certainty that the actual rate ofdeviation is lower.d. The estimated rate of deviation in the population with certainty that the actual rate ofdeviation is higher.arrow_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_forwardWhich 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.arrow_forward
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