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Auditing & Assurance 101 Practice Test: Audit Sampling for Tests of Controls and Substantive Tests of Transactions
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Audit sampling is a technique that allows auditors to test a subset of transactions or account balances to draw conclusions about the entire population. It's an investigative tool that involves selecting less than 100% of the total items within the population of items to be audited. The sample is the portion of the population that the auditor actually examines. This process helps to minimize the risk for users of financial statements who make business and investment decisions based on the company's financial ability and profit-gaining capacity.  Audit sampling is used to conduct tests of... Show more
Auditing & Assurance 101 Practice Test: Audit Sampling for Tests of Controls and Substantive Tests of Transactions
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25 Questions

1. Which of the following would have the least impact in determining sample size for tests of controls?
2. In performing a review of a client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of this technique is population items:
3. In nonstatistical sampling, the calculated sampling error is the difference between the tolerable exception rate and the sample exception rate.
4. In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the:
5. When a small preliminary sample is used to estimate the population exception rate, it (the preliminary sample) cannot be included in the ultimate sample.
6. The auditor's best estimate of the population exception rate is the:
7. You are testing controls over accounts receivable and are determining if the appropriate credit authorization was made by an authorized person. Your sample size is 40 and your computed upper deviation rate is 5%. On the first 10 items sampled you have found 8 deviations. You would most likely:
8. ARACR is normally lower for a public company audit than a private company audit.
9. Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?
10. The tolerable exception rate is the rate that the auditor will permit in the population and still be willing to conclude a control is effective.
11. As the auditor you are assessing the proper sample size to use in testing controls. When using attributes sampling which of the following is most correct?
12. An auditor uses statistical sampling for attributes in internal control testing. She would most likely reduce the planned reliable on the control tested when:
13. If a particular internal control is not followed by the client exactly 6% of the time, and the auditor's tests of that control find three control violations in a sample of 50, the sample is considered to be representative.
14. Which of the following is not true for nonstatistical sampling?
15. If an auditor judgmentally selects a sample of one hundred items from a population and finds two exceptions, the auditor:
16. Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?
17. It is equally acceptable under professional auditing standards for auditors to use either statistical or nonstatistical sampling methods.
18. The auditor may estimate the 'estimated population exception rate' by taking a small preliminary sample from the current year's data or by using the prior year's experience with the client.
19. Which of the following statements regarding block sampling is least likely to be true?
20. The relationship of tolerable exception rate (TER) to sample size is:
21. Which of the following statements is not correct?
22. It is virtually impossible to reduce sampling risk to zero.
23. When the computed upper exception rate is greater than the tolerable exception rate, it is necessary for the auditor to take specific action. Which of the following courses of action would be most difficult to justify?
24. When selecting a sample, random numbers may be obtained either with replacement or without replacement. Although both selection methods are theoretically sound, auditors rarely use replacement sampling.
25. A sample in which the characteristics of the sample are the same as those of the population is a(n):

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