Multiple Choice Questions

Multiple Choice Questions

  1. Sampling risk

(2) Arriving at the conclusion that no material misstatement that exists in the materially misstated population which is based on taking a sample, which includes no misstatement.

This is because sampling risk results from using only a fraction of the clients records book, which might fail to give real representation (Whittington & Pany, 2015).

  1. Assessing sampling risk
  • Efficiency of the audit

Efficiency of audit look at the degree of accuracy with which the auditing procedures and tests are executed to confirm there is no such errors as incorrect rejection

  1. statistical sampling technique
  • Block selection

Block selection auditing sampling method is rarely applied given that it is difficult to make valid references beyond the block or period examined

  1. auditors’ primary objective
  • A representative sample

Sampling audit aims at assessing few transactions that represent all the organizational transactions

  1. Discovery sampling

(2)  Auditors are looking for the critical deviations which are not expected to be frequent in number

This is because discovery sampling aims to ensure that the proportion of units that have certain attributes (errors) does not exceed a given population percentage.

  1. Un-stratified mean-per-unit sampling
  • Larger variance in the dollar value of accounts
  1. sampling techniques for tests of controls
  • Attribute sampling

Attribute sampling enables auditors to estimate the population items proportion that has a given characteristic

  1. Tolerable misstatement
  • Tolerable misstatement is directly related to materiality

Tolerable misstatements looks at the percentage of misstatements that can allowed to exist for the audit to be deemed effective

  1. tests of controls performance
  • Where the expected rate of deviation exceeds tolerable deviation rate.

This is because test of control is used look at the effectiveness of the client’s entity controls to prevent or detect material misstatement.

  1. Estimation of average highway weight
  • Mean per unit

10.46 Sunset Building Supply

  1. working paper comparison
Sunset building Supply
Comparison of checks and disbursements
December 31,
Check returned and still outstanding:  
Returned as cut-off statements $50,440  
Outstanding Checks on 1/14($3600+$8200) $11,800  
Disbursement per client records:  
Outstanding checks on 12/31 $20,758  
Issued between 1/1 and 1/14 $31,482  
Excess of checks returned or outstanding over  
Disbursement per client records   $10,000
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