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AUDITING THEORY
AT.3013 – Audit Sampling R.C.P. SOLIMAN/ K.J. UY
MAY 2021

Reference:
a. PSA 530, Audit Sampling

DISCUSSION QUESTIONS
Introduction c. Applying audit procedures improperly
d. Interpreting results inappropriately
1. In performing tests of controls and tests of details, the
extent and selection of items to test include 8. The risk that the auditor’s conclusion based on a
a. All items. sample may be different from the conclusion if the
b. Specific non-representative items. entire population were subjected to the same audit
c. Audit sampling. procedure
d. All of the above. a. Sampling risk
b. Confidence levels
2. Evaluate whether each of the following statements c. Statistical sampling
qualifies as sampling: d. Tolerable rate and the expected rate of deviation
1.1 – Test performed on 100% of the items within a
population 9. At times a sample may indicate in the case of a test of
1.2 – Selecting items over a certain amount controls, that controls are more effective than they
1.3 – Selecting items for the total population on the actually are. This situation illustrates the risk of
basis that was expected to be representative a. Over-reliance. Type 2: Beta
a. 1.1, 1.2, 1.3 qualify b. Under-reliance.
b. 1.1 and 1.2 qualify; 1.3 does not qualify c. Incorrect precision.
c. 1.1 and 1.2 do not qualify; 1.3 qualifies d. Incorrect rejection.
d. 1.1, 1.2, 1.3 do not qualify
10. At times a sample may indicate in the case of a test of
Testing All Items (100%) details that a material misstatement does not exist
when in fact it does. This situation illustrates the risk
3. Performing 100% testing is least likely possible in of
which of the following? a. Incorrect rejection
a. Large value but small in number accounts. b. Incorrect acceptance Type 2: Beta
b. Assertions with assessed significant risks. c. Over reliance
c. Testing customer credit approvals. d. Under reliance
d. Use of CAATs.
11. The risk likelihood of assessing control risk too low
Testing Specific Non-representative Items (risk of over reliance) and risk of incorrect acceptance
relate to the
4. Testing specific items does not include selecting a. Efficiency of the audit
a. High value or key items. b. Effectiveness of the audit
b. Items to obtain certain information. c. Preliminary estimates of materiality levels
c. Items to test the operation of certain control d. Allowable risk of tolerable misstatements
activities.
d. Representative sample to conclude for an entire 12. Sampling risk may be controlled by:
population. Increasing the Using an appropriate
sample size sample selection
Audit Sampling method
a. Yes Yes
5. Which of the following causes an inappropriate b. Yes No
conclusion or audit risk? c. No Yes
a. Sampling risk. d. No No
b. Non-sampling risk.
c. Both a and b. 13. To determine if a sample is truly representative, an
d. Neither a nor b. auditor must:
a. conduct multiple samples of the same population.
6. A sample in which the characteristics of the sample are b. never use sampling because of the expense
the same as those of the population is a(n): involved.
a. variables sample. c. audit the entire population.
b. representative sample. d. use systematic sample selection.
c. attributes sample.
d. random sample. 14. The risk that the auditor does not recognize
misstatements or deviations included in the sample for
7. Which of the following would cause a sampling error what they are
(or sampling risk) in an audit of financial statements? a. Sampling risk
a. Selecting a non-representative sample b. Confidence levels
b. Selecting inappropriate audit procedures
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c. Statistical sampling c. Actual items.

d. Nonsampling risk d. Any of the above.

15. Which of the following is not an element of 23. To ensure completeness of a population in audit
nonsampling risk? sampling, an auditor may test boundaries and totality
a. The auditor uses inappropriate procedures in of population by
auditing accounts receivable a. The first and last numbers of prenumbered
b. The use of unreasonable small sample size documents, or the beginning and ending days of
c. Misinterpretations of audit evidence an audit period.
d. Auditor fails to recognize the error in the sample b. Accounting for numerical sequence of
prenumbered documents.
The 10-Step Audit Sampling Process c. Footing population items and comparing to control
total.
16. Which of the following is not one of the basic phases d. All of the above.
in audit sampling?
a. Planning the sample. 24. In statistical sampling methods used in substantive
b. Selecting the sample and performing the tests. testing, an auditor most likely would stratify a
c. Evaluating the results of the sample. population into meaningful groups which have similar
d. Each of the above is a phase in audit sampling. characteristics (often monetary value) if
a. Probability proportional to size (PPS) sampling is
Step 1—Define the objective (purpose) of test used
17. In defining the objective of tests of controls or tests of b. The population has highly variable recorded
details, an auditor should consider which of the amounts
following to perform the appropriate audit procedures c. The auditor’s estimated tolerable misstatement is
and obtain relevant audit evidence? extremely small.
a. Financial statements assertions. d. The standard deviation of recorded amount is
b. Materiality. relatively small.
c. Population.
d. Sampling risk. 25. When selecting a stratified sample, the sample size is:
a. determined for the unstratified population and
Step 2—Define the deviation or misstatement then apportioned to each stratum.
18. In performing tests of controls, a deviation refers to b. determined for each stratum and selected from
a. A departure from adequate control performance. that stratum.
b. A difference between the recorded amount and the c. determined for each stratum and selected
amount the auditor determines to be appropriate. randomly from the entire unstratified population.
c. A voided sample. d. always larger than if unstratified sampling had
d. The presence of characteristics of control. been used.

Step 3—Identify the relevant population 26. When using monetary-unit sampling, the recorded
Step 4—Determine the relevant sampling unit amount population is a definition of all the items in
19. Population is the:
a. A process that divides population into sub- a. population.
populations which have an identifying b. population which the auditor has included in the
characteristic and reduces the variability of items sample.
within each stratum and allows sample size to be c. population which contain errors.
reduced without increasing sampling risk stratification d. sample which contain errors.
b. A selection that treats each sampling unit as the
individual monetary units that make up the 27. An auditor is applying probability-proportional-to-size
population. Monetary unit sampling (PPS) sampling (a.k.a., combined attributes-variables
c. The individual items constituting a population. sampling unit (CAV) sampling, cumulative monetary amount (CMA)
d. The entire set of data from which a sample is sampling, dollar-unit sampling (DUS), monetary unit
selected and about which the auditor wishes to sampling (MUS), and value-weighted selection). If the
draw conclusions. population consists of 200 items and is represented by
P1,000,000 what is the probability the auditor will
20. The sampling units might be select for testing an account recorded at P100,000?
a. Physical items (for example, checks listed on a. .005.
deposit slips, credit entries on bank statements, b. .100.
sales invoices or debtors’ balances). c. .025.
b. Monetary units. d. Not determinable from the facts given.
c. Either a or b.
d. Neither a nor b. Step 5—Select the appropriate sampling approach
28. The two general approaches to audit sampling are
21. In identifying the relevant population, an auditor a. Random and nonrandom
should consider b. Statistical and nonstatistical
a. Direction of testing. c. Precision and reliability
b. Completeness. d. Risk and nonrisk
c. For tests of details, stratification or value-weighted
selection. 29. An advantage of statistical sampling—which applies
d. All of the above. the laws of probability to selecting sample items for
examination and evaluating sample results—over
22. In performing vouching, an auditor should obtain a nonstatistical sampling is that statistical sampling
sample from a population of helps an auditor to
a. Records. a. Minimize the failure to detect errors and
b. Supporting documents. irregularities.

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b. Eliminate the risk of nonsampling errors. following illustrates difference estimation approach to
c. Reduce the level of audit risk and materiality to a projecting sample misstatement to population?
relatively low amount. a. Average audited amount of 196,000 200 samples divided
d. Mathematically measures sampling risk. by 200, equals P980. The estimated inventory
balance is then calculated as P980,000 (P980 X
30. A nonstatistical sampling plan can: 1,000). Mean per Unit
a. Overstate the estimate of sampling risk b. The difference of P12,000 is divided by the number
b. Misdirect an auditor to unreliable sampling units of sample items (200) to yield an average
c. Replicate the results of a statistical sampling plan difference of P60. The auditor then multiplies the
d. Understate the degree of audit assurance desired average difference by the number of items in the
population to calculate a total difference of
Test of Controls P60,000 (P60 X 1,000) and the difference is
subtracted from the total recorded amount to
31. Which of the following sampling methods is most obtain an estimated inventory balance of
useful to auditors when performing tests of controls? P980,000. Difference estimation
a. Discovery sampling. c. The ratio of the sum of the sample’s audited
b. Attribute estimation/sampling. amounts to the sum of the sample’s recorded
c. Variable sampling. amounts would have been 0.94 (P196,000 /
d. Unrestricted random sampling with replacement. P208,000). The auditor would multiply the total
recorded amount for the population by this ratio
32. It refers to the statistical sampling plan that does not (0.94) to obtain an estimate of the inventory
use a fixed sample size for tests of controls. It is balance of P978,000 (P1,040,000 X 0.94).
sometimes called “stop-or-go” sampling because the d. None of the above. ratio estimation
plan allows the audit team to stop after examining a
relatively small sample and evaluate the results. If the 38. Classical variables sampling uses the laws of
results are clearly acceptable or clearly unacceptable, probability, the normal distribution theory, and the
the audit team can draw its conclusion; if the results central limit theorem to estimate range of
are inconclusive, the audit team can go forward and a. The amount of misstatement in the account
examine additional items. balance or class of transactions.
a. Ratio estimation sampling b. The true balance for an account balance or class
b. Sequential sampling of transactions.
c. MUS sampling c. Either a or b.
d. Variables sampling d. Neither a nor b.

33. If the auditor is concerned that a population may 39. The distinguishing feature of Monetary-unit sampling
contain exceptions, the determination of a sample size (MUS) is that it tends to select higher transactions or
sufficient to include at least one such exception is a components within an account balance for
characteristic of examination. MUS is not particularly effective at
a. Discovery sampling. detecting:
b. Variables sampling. a. overstatements.
c. Random sampling. b. understatements.
d. PPS sampling. c. errors in current assets.
d. errors in noncurrent assets.
34. Discovery sampling should be used to estimate
whether a population contains 40. Which of the following is not a problem with monetary-
a. Errors of any kind. unit selection?
b. Noncritical errors. a. Population items with a zero recorded balance.
c. Critical deviations. b. Accounts with negative balances.
d. No errors. c. Accounts with small recorded balances that are
significantly understated.
Test of Details d. Population items that should have a zero balance
but do not.
35. Which of the following sampling methods would be
used to estimate a numerical measurement of a Step 6—Determine the sufficient sample size
population, such as a peso value?
a. Attributes sampling Test of Controls
b. Stop-or-go sampling
c. Variables sampling 41. When sampling for attributes, which of the following
d. Random sampling would decrease sample size?
a b c d
36. The following are the classical variables techniques, Operating Increase Decrease Increase Decrease
except: effectiveness
a. Ratio estimation of controls
b. Mean-per-Unit (MPU) estimation Tolerable rate Decrease Increase Increase Increase
c. Value weighted selection of deviation
d. Difference estimation Expected Increase Decrease Decrease Decrease
control
37. The auditor selected samples of 200 with recorded deviation
amount or P208,000, from population of 1,000 Risk of over Decrease Increase Increase Decrease
inventory items with total recorded amount of reliance
P1,040,000. After performing the necessary audit
procedures, the auditor determined that the adjusted 42. Which of the following statements is correct
amount of the samples is P196,000. Which of the concerning statistical sampling in tests of controls?

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a. There is an inverse relationship between the

sample size and the expected control deviation 48. In substantive testing, which of the following would
rate. increase sample size?
b. As the population size doubles, the sample size a b c d
should also double. Assessment Increase Increase Increase Decrease
c. The qualitative aspects of deviations are not of control risk
considered by the auditor. Reliance on Increase Decrease Decrease Increase
d. There is an inverse relationship between the other
sample size and the tolerable rate of deviation. substantive
procedures
Tolerable Decrease Increase Decrease Increase
43. The tolerable rate of deviation is the maximum rate of
misstatement
deviations permissible by the audit team without
Expected Increase Decrease Increase Decrease
modifying the planned assessed level of control risk. amount of
In determining the tolerable rate of deviation, the misstatement
audit team should consider Risk of Decrease Increase Decrease Increase
a. The planned assessed level of control risk. incorrect
b. The degree of assurance desired by the audit acceptance
evidence in the sample.
c. If a control is judged to be more important and 49. Determine which of the following would lead to a larger
would result in a more significant reduction in sample size for substantive test of details of an
substantive testing, the tolerable rate of deviation account balance. Assume all other factors being
should be established at lower levels. equal.
d. All of the above. a. Smaller measure of tolerable misstatement
b. Greater reliance of analytical procedures
44. In determining the acceptable level of the risk of c. Greater reliance on internal controls
overreliance (i.e., the sampling risk), an auditor d. Smaller expected frequency of errors
should consider
a. The planned assessed level of control risk. 50. When planning a test of details using MUS sampling,
b. The degree of reliance that the audit team wishes tolerable misstatement is usually set
to place on the client’s internal control. a. higher than planning materiality.
c. As the planned level of control risk is lower, it b. lower than planning materiality.
becomes quite important for the audit team to c. either higher or lower than planning materiality.
reduce the exposure to the risk of overreliance. d. the same as materiality.
d. All of the above.
51. Tolerable misstatement may be _____ amount than
45. How is the expected population deviation rate performance materiality?
determined? a. higher, lower or the same.
a. Rate of deviations from prior engagements b. high or lower.
adjusted, if any, for controls improvement or c. lower or the same.
deterioration during the current year. d. the same.
b. Use a small sample (referred to as a pilot sample)
to estimate the rate of deviations in case of initial 52. In determining the acceptable level of the risk of
audit. incorrect acceptance (i.e., the sampling risk), for
c. Either a or b. example 10%, an auditor should consider
d. Neither a nor b. a. The audit risk.
b. The risks of material misstatement (i.e., inherent
46. The tolerable rate of deviations for a test of controls is risk and control risk).
generally c. The analytical procedures risk.
a. Lower than the expected rate of errors in the d. All of the above.
related accounting population.
b. Higher than the expected rate of errors in the Step 7—Select the representative sample items
related accounting records. 53. The audit team’s basic goal in selecting a sample is to
c. Identical to the expected rate of errors in the increase the likelihood that it is representative of the
related accounting records. population, thereby reducing sampling risk. For
d. Unrelated to the expected rate of errors in the example, if the audit team is examining a sample of
related accounting records. sales invoices, this sample should include sales
invoices that
47. Which of the following statements is most likely a. Have been prepared throughout the year.
incorrect regarding high expected deviation rate and b. Represent both large and small amounts.
high expected misstatement relating to sampling used c. Have been prepared by different individuals
for tests of controls and tests of details, respectively? involved in the invoice preparation process and
a. If the expected rate of deviation is unacceptably represent different customers or geographic
high, the auditor will normally decide not to areas.
perform tests of controls. d. All of the above.
b. If the expected misstatement is high, the auditor
will normally decide not to perform tests of details. 54. Identify the sample selection method used, following
c. If the expected misstatement is high, 100% the same order:
examination may be appropriate when performing I. Selecting items using a constant interval between
tests of details. selections; the first interval having a random start.
d. If the expected misstatement is high, use of a II. Selecting items from the entire population with no
large sample size may be appropriate when intention to include or exclude specific units
performing tests of details III. All items in the population or within each stratum
have a known chance of selection
Test of Details a. Systematic, random, haphazard.

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b. Systematic, haphazard, random. c. Cannot be located.

c. Haphazard, systematic, random. d. Represents an immaterial peso amount.
d. Random, systematic, haphazard.
62. An auditor plans to examine a sample of 20 purchase
55. An underlying feature of random-based selection of orders for proper approvals as prescribed by the
items is that each client’s internal control procedures. One of the
a. Stratum of the accounting population be given purchase orders in the chosen sample of 20 cannot be
equal representation in the sample. found, and the auditor is unable to use alternative
b. Item in the accounting population be randomly procedures to test whether that purchase order was
ordered. properly approved. The auditor should
c. Item in the accounting population should have an a. Chose another purchase order to replace the
opportunity to be selected. missing purchase order in the sample.
d. Item must be systematically selected using b. Consider this test of control invalid and proceed
replacement. with substantive tests since internal control cannot
be relied upon.
56. If certain forms are not consecutively numbered c. Treat the missing purchase order as a deviation for
a. Selection of a random sample probably is not the purpose of evaluating the sample.
possible. d. Select a completely new set of 20 purchase orders.
b. Systematic sampling may be appropriate.
c. Stratified sampling should be used. Step 9—Evaluate the test results and reach conclusion
d. Random number tables cannot be used.
63. Anomalous error means
57. In systematic sample selection, the population size is a. An error (deviation or misstatement) that arises
divided by the number of sample items desired in from an isolated event that has not recurred other
order to determine the: than on specifically identifiable occasions and is
a. sampling interval. therefore not representative of errors in the
b. tolerable exception rate. population.
c. computed upper exceptions rate. b. An deviation or misstatement (error) that the
d. mean. auditor expects to be present in the population.
c. Rate of deviation from prescribed internal control
58. When using systematic selection procedures with procedures set by the auditor in respect of which
monetary-unit sampling of accounts receivable, the the auditor seeks to obtain an appropriate level of
interval is determined by: assurance that the rate of deviation set by the
a. consulting a random number table. auditor is not exceeded by the actual rate of
b. dividing the population size by the desired sample deviation in the population.
size. d. Monetary amount set by the auditor in respect of
c. dividing the sample size by the account with the which the auditor seeks to obtain an appropriate
largest value. level of assurance that the monetary amount set
d. dividing the population size by the account by the auditor is not exceeded by the actual
receivable with the largest value. misstatement in the population.

59. One unique feature of using systematic random 64. Regardless of the results of the attributes sampling
selection in MUS is that the sampling unit is defined as application, the audit team should conduct a
an individual amount within a population. The audit qualitative evaluation of deviations to determine their
team examines the logical unit (e.g., a transaction, a nature and cause. A qualitative evaluation of
customer balance, etc.) that contains the individual deviations attempts to answer questions such as:
sampling unit that is selected for examination. The a. Do deviations represent a pervasive error made
statistical methods used to evaluate monetary-unit consistently on all transactions or an isolated
samples: mistake made on a specific transaction?
a. neither exclude nor include units twice. b. Are deviations intentional or unintentional in
b. permit the inclusion of a unit in the sample more nature? Do deviations represent a
than once. misunderstanding of instructions or careless
c. do not permit a unit to be included in the sample attention to duties?
more than once. c. Do deviations have implications with regard to the
d. ignore the possibility that a unit may be included effectiveness of other controls?
in a sample more than once. d. All of the above.

60. Which of the following sample selection techniques is 65. Which of the following statements regarding
least desirable for use by an auditor? projecting the results of audit sampling is incorrect?
a. Systematic selection a. For tests of details, the auditor shall project
b. Stratified selection misstatements found in the sample to the
c. Block selection population.
d. Sequential selection b. When a misstatement has been established as an
anomaly, it may be excluded when projecting
Step 8—Perform the testing and evaluate evidence misstatements to the population.
c. Projected misstatement may not be sufficient to
61. An auditor is testing internal control procedures that determine an amount to be recorded.
are evidenced on an entity’s vouchers by matching d. For tests of controls, projection of deviations is
random numbers with voucher numbers. If a random necessary.
number matches the number of a voided voucher, that
voucher ordinarily should be replaced by another
voucher in the random sample if the voucher
a. Constitutes a deviation.
b. Has been properly voided.

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Test of Controls c. Either a or b.

d. Neither a nor b.
Use the following information for the next two questions:
Test of Details
An auditor desired to test credit approval on 10,000 sales
invoices processed during the year. The auditor designed 69. An auditor is evaluating the results of a variables
a statistical sample that would provide 1% risk of sampling plan. Which of the following is not relevant
assessing control risk too low (99% confidence) that not to the auditor's judgment about the sample?
more than 7% of the sales invoices lacked approval. The a. Management's explanations for why errors in the
auditor estimated from previous experience that about 2 sample occurred.
½% of the sales invoices lacked approval. A sample of 200 b. Projecting the sample error to the population.
invoices was examined and 7 of them were lacking c. Considering the effects of sampling risk.
approval. The auditor then determined the achieved upper d. Qualitative information that lends insight into
precision limit to be 8%. Sample dev. rate
Allow. Sampling risks
7/200= 3.5% errors found.
4.5%
Upper precision limit 8%
66. The allowance for sampling risk was 70. Which one of the following is a proper course of action
a. 5 ½% c. 3 ½% for the auditor when the upper misstatement limit
b. 4 ½% d. 1% exceeds the tolerable misstatement?
a. Analyze the detected misstatements for some
67. In the evaluation of this sample, the auditor decided common problems.
to increase the level of preliminary assessment of b. The auditor can ask the client to correct the known
control risk (CR is high) because the misstatements or investigate misstatements that
a. Tolerable rate (7%) was less than the achieved have been identified and the potential for further
upper precision limit (8%). misstatements and to make any necessary
b. Expected deviation rate (7%) was more than the adjustments.
percentage of errors in the sample (3 ½%). c. The auditor can expand the sample. If enough
c. Achieved upper precision limit (8%) was more additional items are examined and no additional
than the percentage of error in the sample 3- misstatements are detected, the recalculated
1/2%). upper limit on misstatements could fall below the
d. Expected deviation rate (2 - ½ %) was less than tolerable misstatement to enable the audit team
the tolerable rate (7%). could conclude that the financial statements were
not materially misstated
68. When the upper precision limit exceeds the tolerable d. All of the above.
rate of deviation, the auditor may
a. Reduce reliance on internal control. Step 10—Complete documentation
b. Expand the sample to examine a larger number of
items by at least the number of items in the
original sample, as a rule of thumb. - now do the DIY drill –

DO-IT-YOURSELF (DIY) DRILL

1. Which of the following is not an aspect of sampling a. The alpha error is of greater concern to the
risk? auditor than beta error
a. Risk of assessing control risk too high b. The beta error is of greater concern to the auditor
b. Risk of not identifying a misstatement included in than alpha error
a sample c. The alpha error and the beta error are of equal
c. Risk of incorrect acceptance importance to the auditor
d. Risk of sampling results indicating that a d. Neither the alpha error nor beta error need be
population is materially misstated when it is not considered by the auditor

2. Which of the following is true about sampling and

4. In examining cash disbursements, an auditor plans to
nonsampling risks?
choose a sample using systematic selection with a
a. Sampling risk can be reduced by increasing the
random start. The primary advantage of such a
sample size
systematic selection is that population items
b. Sampling risk cannot be eliminated
a. That include irregularities will not be overlooked
c. Nonsampling risk can be eliminated by proper
when the auditor exercises compatible reciprocal
engagement planning, supervision and review
options.
d. Nonsampling risk arises from the possibility that
b. May occur in a systematic pattern, thus making
the auditor’s conclusion, based on a sample may
the sample more representative.
be different from the conclusion reached if the
c. May occur more than once in a sample.
entire population were subjected to the same audit
d. Do not have to be prenumbered in order for the
procedure
auditor to use the technique.

3. In performing substantive tests, the auditor is 5. When the auditor goes through a population and
concerned with errors of sampling selects items for the sample without regard to their
size, source, or other distinguishing characteristics, it
The risk of incorrect rejection (Alpha error or Type I is called:
error) a. Block sample selection.
The risk of incorrect acceptance (Beta error or Type II b. Haphazard selection.
error) c. Systematic sample selection.
d. Statistical selection.
Which of the following is true about alpha and beta
errors?

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6. In testing payroll transactions, an auditor discovers b. Risk of assessing control risk too low.
that four out of a statistical sample of one hundred c. Tolerable exception rate.
selected time cards were not signed by the appropriate d. Population size.
supervisor. To evaluate the materiality or significance
of this control deficiency, the auditor should 13. Which of the following would be an example of
a. Compare the tolerable deviation rate with the sampling error?
expected deviation rate. a. The auditor chose a random sample, calculated a
b. Compute an upper precision limit and compare sample error rate of 4%, and concluded that the
with the tolerable rate. population error rate was 4%. The true population
c. Evaluate the amount of the four time cards in error rate was 6%.
relation to the financial statements. b. The auditor selected a non-random sample and
d. Report the deviations and let management assess generalized the sample results to the population
the significance because they are in the best using statistical methods.
position to know. c. The auditor chose a non-random sample to focus
on transactions for only 2 months of the year.
7. Assuming the tolerable deviation rate is 5 percent, the d. The auditor chose a random sample and divided
expected population rate is 3 percent, and the the number of errors in the sample by the
allowance for sampling risk is 2 percent, what should number of accounts in the sample to calculate
an auditor conclude if tests of 100 randomly selected the sample error rate.
documents reveal 4 deviations?
a. Accept the sample results as support for assessing 14. Some conditions leading to a larger sample size in
control risk below the maximum because the substantive testing:
tolerable rate less the allowance for sampling risk - Reliance on internal control
equals the expected population deviation rate. 1.1 higher reliance
b. Assess control risk at the maximum because the 1.2 lower reliance
sample deviation rate plus the allowance for - Reliance on other substantive tests related or
sampling risk exceeds the tolerable rate. same audit objectives as class of transactions
c. Assess control risk at the maximum because the 2.1 higher reliance
tolerable rate plus the allowance for sampling risk 2.2 lower reliance
exceeds the expected population deviation rate. - Measure of tolerable errors for a specific audit
d. Accept the sample results as support for assessing objective
control risk below the maximum because the 3.1 larger measure
sample deviation rate plus the allowance for 3.2 smaller measure
sampling risk exceeds the tolerable rate. - Expected size and frequency of errors
4.1 larger errors or higher frequency
8. Statistical sampling techniques may be used to sample 4.2 smaller errors or lower frequency
“attributes” as well as “variables”. An example of a a. Combination of 1.2, 2.2, 3.2, 4.1
“variable” that can be tested using statistical sampling b. Combination of 1.1, 2.1, 3.2, 4.1
technique would be: c. Combination of 1.2, 2.2, 3.1, 4.2
a. The number of errors in the client-prepared aging d. Combination of 1.1, 2.1, 3.1, 4.2
schedule of accounts receivable.
b. The balance in the accounts receivable account. 15. Which of the following statements is correct
c. Compliance with the requirement that each concerning statistical sampling in tests of controls?
voucher be initialed by the treasurer before a a. The population size has little or no effect on
check is prepared for payment of the voucher. determining sample size except for very small
d. The number of entries improperly posted to a job population.
order cost card. b. The expected control deviation has little or no
effect on determining sample size except for very
9. How would increases in tolerable misstatement and small populations.
assessed level of control risk affect the sample size in c. As the population size doubles, the sample size
a substantive test of details? also should double.
Increase in tolerable Increase in assessed d. A large sample size should be selected as the
misstatement level of control risk expected control deviation decreases.
a. Increase sample size Increase sample size
b. Increase sample size Decrease sample size - end of AT.3013 -
c. Decrease sample size Increase sample size
d. Decrease sample size Decrease sample size

10. Statistical sampling provides a technique for

a. Exactly defining materiality.
b. Greatly reducing the amount of substantive testing.
c. Eliminating judgment in testing.
d. Measuring the sufficiency of evidential matter.

11. The expected population deviation rate of client billing

errors is 3%. The auditor has established a tolerable
rate of 5%. In the review of client invoices the auditor
should use
a. Stratified sampling. c. Discovery sampling.
b. Variable sampling. d. Attribute sampling.

12. Which of the following is not generally considered in

determining sample size for tests of controls?
a. Expected population exception rate.

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