AUDITING+ASSURANCE SERVICES (LL)
11th Edition
ISBN: 9781266448119
Author: MESSIER
Publisher: MCG
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Chapter 9, Problem 9.21P
a
To determine
Introduction:
Monetary Unit Sampling (MUS): It is a method used to gauge the amount of misstatement in financials. MUS helps auditors to overcome difficulties in other sampling systems. MUS is normally used for testing accounts related to monetary assets.
The Advantages of using Monetary-unit sampling over classical variable sampling.
b
To determine
Introduction:
Monetary Unit Sampling (MUS): It is a method used to gauge the amount of misstatement in financials. MUS helps auditors to overcome difficulties in other sampling systems. MUS is normally used for testing accounts related to monetary assets.
The sample size and sampling interval for the given information.
c
To determine
Introduction:
Monetary Unit Sampling (MUS): It is a method used to gauge the amount of misstatement in financials. MUS helps auditors to overcome difficulties in other sampling systems. MUS is normally used for testing accounts related to monetary assets.
The Upper misstatement limit UML for the following misstatements.
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Monetary Unit Sampling. Georgie Costanza, CPA, is auditing the accounts receivable of Vandalay Industries and is considering the use of MUS techniques. Costanza has a number of questions regarding the use of MUS and has asked you to provide answers to them.
Required:a. Under generally accepted auditing standards, can Costanza use nonstatistical sampling inthe examination of Vandalay accounts receivable?b. What are the advantages to using statistical sampling in the audit?c. What are the risks associated with sampling, and to what type of losses do they exposeCostanza?d. How does Costanza establish the appropriate level of the risk of incorrect acceptance?e. Is Costanza permitted to specify that certain items be examined, or do all items need tobe randomly selected?f. How can Costanza increase the likelihood that the items in the sample are representativeof the population?g. Other than the dollar amount of the misstatements, are any other factors important forCostanza to consider with…
Select the necessary words from the list of possibilities to complete the following statements.
1.
2.
7.
Inherent in the use of sampling is
representative of the population.
9.
When the auditors estimate sampling risk using professional judgment rather than by using the laws of
probability, they are said to be using.
sampling.
an item from the population may be selected two or more times for inclusion in the
When using
sample.
The term
3.
4.
5. In performing tests of controls, the auditors are primarily concerned with the risk of assessing
6.
To use attributes sampling tables, the auditors must stipulate the desired risk of assessing control risk too low,
the expected deviation rate in the population, and the desired
Statements
risk which is the possibility of selecting a sample that i not
refers to the process of dividing a population into relatively homogeneous subgroups.
sampling is usually used in situations in which the auditors expect a very low rate of occurrence of
some…
Which of the following is an advantage of nonstatistical sampling?a. It measures the audit team’s exposure to sampling risk.b. It is required by generally accepted auditing standards.c. It ensures that samples are randomly selected.d. It is typically less complex than statistical sampling
Chapter 9 Solutions
AUDITING+ASSURANCE SERVICES (LL)
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
Knowledge Booster
Similar questions
- s1: The only way to know with certainty whether a sample Is representative is to subsequently audit the entire population. s2: One way to control sampling risk is to increase the sample size. s3: Sampling risk results from the auditor's failure to recognize exceptions in transaction data. A. all statements are true b. all statements are false c. s1 and s2 are true d. s1 and s3 are truearrow_forwardAn advantage of statistical sampling over nonstatistical sampling methods is that statistical methodsa. Afford more assurance than a nonstatistical sample of equal size.b. Provide an objective basis for quantitatively evaluating sampling risk.c. Can more easily convert the sample into a dual-purpose test useful for substantive procedures.d. Eliminate the need to use judgment in determining appropriate sample sizesarrow_forwardAttribute sampling enables the auditor to directly assess whether a rule is operating successfully or not, sampling is more reliable for assessing controls. This is crucial in circumstances where data accuracy or completeness are essential, such as when a credit-check control is used for consumer orders. The focus is on estimating the overall monetary value of a population, therefore monetary-unit sampling is more suitable for verifying the accuracy of financial statements or specific account balances. It is crucial to remember that the exact audit objectives and the type of data being checked will determine the sampling technique that is used. Do you believe monteray unit sampling can do the same thing?arrow_forward
- STATEMENT 1: Since audit sampling is an essential part of the audit process, each step in an audit sampling application should be adequately planned. STATEMENT 2: No sampling method can provide the auditor with an absolute assurance that a particular sample is perfectly representative of the population. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correctarrow_forwardIn using audit sampling for exception rates: the auditor wants to know the most the exception rate is likely to be. sampling error is the likelihood that the auditor will miss a monetary misstatement. the upper limit of the interval estimate is known as the sampling risk. CUER cannot be considered in the context of specific audit objectives.arrow_forwardIn audit sampling applications, sampling risk isa. A characteristic of statistical sampling applications but not of nonstatistical applications.b. The probability that the audit team will fail to recognize erroneous accounting in the client’sdocumentation.c. The probability that accounting misstatements will arise in transactions and enter theaccounting system.d. The probability that an audit team’s conclusion based on a sample might be differentfrom the conclusion based on an audit of the entire population.arrow_forward
- 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_forwardAuditors project the misstatements found in the sample tothe population when using statistical sampling, but not when usingnonstatistical sampling. TRUE OR FALSE? WHY?arrow_forwardSTATEMENT 1: In an audit sampling application, detection risk arises from the uncertainties of nonsampling risk and sampling risk. STATEMENT 2: Non sampling risk can be reduced to an acceptably low level by a 100% examination of the account balance or transaction class. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correctarrow_forward
- On Andit sampling involves applying an audit procedure to less than 100 percent of the population for the purpose of evaluating some characteristic of the population. When an auditor uses sampling. an element of uncertainty enters into the auditor's conclusions. Required: a. Explain the auditor's justification for accepting the uncertainties that are inherent in the sampling process. b. Discuss the uncertainties that collectively embody the concept of audit risk. c. Discuss the nature of sampling risk and nonsampling risk. Include the effect of sampling risk on tests of controls in terms of Type I and Type II errors. Accessibility: Investigate Stylesarrow_forwardMonetary Unit and Classical Variables Sampling. Indicate whether each of the following characteristics applies to monetary unit sampling (MUS), classical variables sampling (CVS),both MUS and CVS (both), or neither MUS nor CVS (neither).a. May be used in conjunction with substantive procedures.b. Tends to select higher dollar items for examination.c. Is more effective in identifying overstatements.d. Incorporates assessments of tolerable misstatement in determining sample size.e. Incorporates assessments of the population variability in determining sample size.f. Controls the audit team’s exposure to the risk of incorrect rejection and the risk of incorrect acceptance.g. Requires the audit team to project discovered misstatements to the population.h. Can expose the audit team to nonsampling risk.i. May be used in conjunction with the study and evaluation of internal control.j. Is more appropriate for use when a higher number of misstatements is anticipated.arrow_forwardThe two types of sampling risks auditors face include the risk of incorrect acceptance and the risk of incorrect rejection. What do each of these mean and how will each impact the audit process and the audit results?arrow_forward
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