Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
10th Edition
ISBN: 9780077732509
Author: William F Messier Jr, Steven M. Glover Associate Professor, Douglas F. Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 9.16MCQ
To determine
Concept Introduction:
Sampling is the method of selecting few items to check from the entire population under examination. Auditors apply sampling method while performing their
Sampling can be statistical or non statistical.
To choose: the effect of increase in tolerable misstatement and assessed level of control risk.
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The risk that the decision made based on the sample will differ from the decision madebased on the entire population is referred to asa. Audit risk.b. Examination risk.c. Sampling risk.d. Nonsampling risk
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
For both tests of controls and substantive tests of details, non-sampling risk can be reduced by increasing sample size, while sampling risk can be reduced by proper engagement planning supervision and review.
TRUE OR FALSE? WHY?
Chapter 9 Solutions
Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
Ch. 9 - Prob. 9.1RQCh. 9 - Prob. 9.2RQCh. 9 - Prob. 9.3RQCh. 9 - Prob. 9.4RQCh. 9 - Prob. 9.5RQCh. 9 - Prob. 9.6RQCh. 9 - Prob. 9.7RQCh. 9 - Prob. 9.8RQCh. 9 - Prob. 9.9RQCh. 9 - Prob. 9.10RQ
Ch. 9 - Prob. 9.11MCQCh. 9 - Prob. 9.12MCQCh. 9 - Prob. 9.13MCQCh. 9 - Prob. 9.14MCQCh. 9 - Prob. 9.15MCQCh. 9 - Prob. 9.16MCQCh. 9 - Prob. 9.17MCQCh. 9 - Prob. 9.18MCQCh. 9 - Prob. 9.19MCQCh. 9 - Prob. 9.20MCQCh. 9 - Prob. 9.21PCh. 9 - Prob. 9.22PCh. 9 - Prob. 9.23PCh. 9 - Prob. 9.24PCh. 9 - Prob. 9.25PCh. 9 - Prob. 9.26P
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Similar questions
- How does Sampling Risk compare to Non-Sampling Risk?arrow_forwardWhat is the relationship between Evidence and Detection Risk?arrow_forwardIn determining the tolerable deviation rate for a test of controls, the auditors consider: Their planned assessed level of control risk. The sample size. The nature of the test. The expected deviation rate in the population.arrow_forward
- Which of the following factors used to determine sample size is normally based on the extentto which the audit team expects to rely on the internal control being examined?a. Allowance for sampling risk.b. Expected population deviation rate.c. Sample rate of deviation.d. Tolerable rate of deviationarrow_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_forwardWhat is the purpose of sampling in auditing? Why is it relevant in performing test of controls and substantive testing?arrow_forward
- Which of the following components of the audit risk model is most closely associated with attributes sampling?a. Audit risk.b. Control risk.c. Detection risk.d. Inherent risk.arrow_forwardWhich of the following components is not used in determining the upper limit on misstatements?a. Basic allowance for sampling risk.b. Incremental allowance for sampling risk.c. Projected misstatement.d. Tolerable misstatementarrow_forwardWhat is the meaning of “statistically significant” in relation to the null hypothesis?arrow_forward
- In determining the sample size for a test of controls, an auditor should consider the expected deviation rate, desired confidence level, and the * O Nature and cause of deviations O Population size O Risk of incorrect acceptance O Tolerable deviation ratearrow_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_forwardSubject: 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_forward
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