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Quiz
Selecting Items for Testing 9. The isk likelihood of asessing control risk too low
1. Evaluate whether each of the following statements (risk of over reliance) and risk of incorrect acceptance
qualifles as sampling: relate to the
1.1 - Test performed on 100% of the items within Eficiency of the audit
population b. Effectiveness of the audit
er the total nonuiation on the A. Alowable dek of toerblaie
basis that was expected to be representative
1.1, 1.2, 1.3 qualify 10. The risk that the auditor does not recognlze
b. 1.1 and 1.2 qualify; 1.3 does not qualify Whens Jeviations included In the sample for
C. 1.1 and 1.2 do not qualify; 1.3 qualifies C. Statistical sampling
d. 1.1, 1.2, 1.3 do not qualify a. Sampling risk
b. Confidence levels d. Non-sampling risk
Baslc Concepts of Audit Sampling
2. Audlt sampling, which involves the application of audit 11. Which of the following is not an element of non
sampling risk?
proceduret ess than o0 perent or f items within a
a. The auditor uses inapproprlate procedures In
unlts have a chance of selection, identifies two general auditing accounts recelvable
approaches to audit sampling. They are b. The use of unreasonable small sample size
a. Random and nonrandom
sterpretations of audit evldence
to recognze the error the sample
b. Statistical and nonstatistical
. Precision and reliability 12. Which of the following would be an example of

3. An advantage of statistical sampling over nonstatistical Sampingtr chose a random sample,

sampling is that statistical sampling helps an auditor to calculated a sample error rate of 4o, and
a. Minimize the
Irregularities.
failure to detet errors and oncluded that the population error rate was
4%. The true population error rate was 6%.
b. Eliminate the risk of non-sampling erors. The auditor selected a non-random sample and
relatlvelw low
audit risk materiality to a generalized the sample results to the population
d. Mathematically measures samnpling risk. The auditor chose a non-random sample to focus
4. atistical plan can
Anensiasmatedsampling risk
on transactions for only 2 months of the year
The auditor chose a random sample and divided
b. Misdirect an auditor to unreliable sampling units the number of errors in the sample by the number
C. Replicate the results of a statistical sampling of accounts in the sample to calaulate the sample
eror rate.
plan
d. Understate the degree of audit assurane desired Audit Sampling Process
5. The risk that the auditor's conclusion based on a 13. Which of the following is not one of the basic phases in
audi
sample may be different from the onclusion if the Planning the
he sample
entire population were subjected to the same audit Evaluating the results of the sample
procedure
npling risk Selecting the sample and performing the tests
h Confidence levels d. Each of the above is a phase in audit sampling.
c Statistical sarnpling 14. Sampling unit is
d. Tolerable rate and the expected rate of deviation a. Aprocess that divides population into sub
6. Which of the fllowing best illustrates the concept of populations which have an identifying
sampling risk? diaracteristic and reduces the variability of items
i n c s a p i e size to be
a. A randomly chosen sample may not be reduced wittout
representative of the population as a whole A selection that treats each sampling unit as the
on the characteristic of interest.
edures that are
individual monetary units that make up the
b
nt anrnriate to achieve the specific objective population.
The individual items constituting a population.
An auditor may fail to recognize errors in the data from whC sample Is
documents examined for the chosen sample. endre which the auditor wishes
nd about
d. The documents related to the chosen sample may draw conclusions.
not be available for inspection.
Sample Size: Test of Controls
7. At times a sample may indicate in the case of a test of 15 r attributes, which of the following
controls, that controls are more effective than they sample size?
would decrease
actually are. This situation llustrates the risk of
bence. et precision. Ihcrease Decrease Increase Decrease
correct rejection. Operating
dfectiveness
8. At times a sample may indicate in the case of a test of of controls
when in fact sstatement does
ation illustrates the risk Tolerable rate Decrease Increase Inrease Increase

of deviaton Increase Decrease Decrease Decrease

a Incorrect rejection e Over reliance
Control
b. Incorrect acceptanced. Under reliance deviation
Rsk of over Decrease Increase Increase Decrease

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rellance I Selecting items using a constant interval between

16. To determine the sample size fora test of control, an selections; the first interval having a random start.
auditor should onsider the tolerable rate of deviation, I. Selecting items from the entire population with no
the allowable risk of assessing control risk too low, and m. Allitems in the population or within eachstratum
the have a known chance of selection
a. Expected deviation rate
Systematic, random, haphazard.
pielk of incorrect acceptance b. Systematic, haphazard, random.
Haphazard, systematic, random.
d. Risk of incorrect rejection Random, systematic, haphazard.
17. The tolerable rate of deviations for a test of ontrols is
generaly 23. An undertying feature of random-based selection of
tems is that each
a. Lower than the expected rate of erTors in the sa r te accountng population be given
related accounting population.
b. Higher than the expected rate of errors in the b. Itern in the accounting population be randomly
related accounting records. ordered.
C. a p e c t e d rate of errors in the
relaterd C Item in the accounting population should
have an opportunity to be selected.
d. Unrelated to the expected rate of erors in the Item must be systematically selected using
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reliance Selecting items using a constant interval between

16. To determine the sample size for a test of control, an Selecting items from the entire population with no
auditor should consider the tolerable rate of deviation, intention to indude or exclude speciflc units
the allowable risk of assessing control risk too low, and 1. All items in the population or within each stratum
Lne
Expected deviation rate
have a known chance of selection
b. Upper precision limit a. Systematic, random, haphazard.
C. Rsk of incorrect acceptance b. Systematic, haphazard, random.
d. Rsk of incorrect rejection d. Random, systematic, haphazard.
17. The tolerable rate of deviations for a test of controls is An underlying feature of random-based selectlon of
23.
generally
a. Lower than the expected rate of errors in the
a. Stratum of the accounting population be glven
related accounting population. equal representation in the sample.
b. Higher than the expected rate of errors in the b. Item in the accounting populatlon be randomly
ordered.
C. Identlcal to the expected rate of eors in the
Item in the accounting population should
related accounting records.
d. Unrelated to the expected rate of errors in the d. Item Opportunity
must be systematlcally selected uslng
related accounting ecords. replacement.
18. Which of the following statements is correct concerning 24. If certain forms not consecutlvely numbered
statistical sampling in tests of controls? a. Selection of a random sample probably I not
a. The population size has little or no effect on possible.
determining sample size exc ept for very small b Systematic sampling may be appropriate.
b. The exnected control deviation has little or no C. Stratified sampling should be used.
d. Random number tables cannot be used.
efect on determining sample size except for very
Small populations. 25. Which of the following statistical selection technlques Is
c. As the population size doubles, the sample size least desirable for use by an auditor?
aso should double. a. Systematic selection C. Block selection
d. large sample should be selected as the b. Stratified selection d. Sequential selection
xpected con
ml devation degeases.
Nature and Cause of Error
19. Which of the following statements is correct concerning 26. An auditor plans to examine a sample of 20 purchase
statisticdlsampe lationship between the cont
sample size and the expected control deviation purchase orders in the chosen sample of 20 cannot be
rate. found, and the auditor is unable to use alternative
b. As the population size doubles, the samnple size procedures to test whether that purchase order was
should also double. properly approved. The auditor should
quaitative aspects of deviations are not Ciose anoner purchase order to replace the
the
d. There is an inverse relation ship between the b Consider this test of control invalid and proceed
sample size and the tolerable rate of deviation. with substantive tests since internal control cannot
Sarnple Size: Test of Details te relied upon.
C Treat the missing purchase order as a
20. In substantive testing, which of the following would deviation for the purpose of evaluating the
increase sample size?
a
d. Selecta completely new set of 20 purchase orders.
Assessment Increase Increase Increas Derease
of control risk e 27. An auditor is testing intemal control procedures that
Rellance on Increase Decrease Decreas Increase
random numbers with voucher numbers. If a random
substantive number matthes the number of a voided voucher, that
procedures voucher ordinarily should be replaced by another
Tolerable Decrease Increase Decreas Increase voucher in the random sample if the voucher
Sstatement a. Constitutes a deviation.
Increase Decrease Dearease voided.
amount of C. Cannot beoperry
misstatement d. Represents an immaterial peso amount.
Risk of Decrease Increase Decreas Increase
incorrect 28. Anome
acceptance omalous error(deviation or misstatement) that
arises from an isolated event that has not
21. Determine which of the following would lead to a larger recurred other than on specificallyY
identifiable occasions and is therefore not
other factor qual.
a. Smaller measure of tolerable misstatement representative of errors in the population.
b
b. Greater reliance of analytical procedures An deviation or misstatement (error)
(e D a e
c. Greater reliance on internal controls
d. Smaller expected frequency of erors
c. Rate of deviation from prescribed internal control
procedures set by the auditor in respect of which
Sample Selection Methods the auditor seeks to obtain an approprlate level of
22. Identify the sample selection method used, following assurance that the rate of deviatlon set by the
the same order:

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auditor Is not exceeded by the actual rate of

deviation In the population.
d. Monetary amount set by the auditor in respect of
which the auditor seeks to obtain an appropriate
by the auditor is not v Y mountactual
misstatement in the population,
Attributes Sampling
29. Which of the following sampling methods is most
useful to auditors when performing tests of controls?
a. Discovery sampling.
b. Attribute estimation/sampling.
Variable sampling
Unrestricted random sampling with replacement.
30. Which of the fallowing statistical sampling plans does
not use a fixed sample size for tests of controls?
estmaton sampling sampling
sampling Varables sampling
 IMUS INSTITUTE
OF SCIENCE AND TECHNOLOGY
COLLEGE OF ACCOUNTANCY

ASSURANCE PRINCIPLES AND GOOD GOVERNANCE

| Semester S.Y. 2021
(Dr. Catherine O. Aquino. CPA)

Nume: Karluz Mhore D. Trugo Score:

AUDITSAMPLING
I. For which of the following audit tests would an auditor most likely use attribute sampling?
A. Selecting accounts receivable for confirmation of account balances.
B. Examining invoices in support of the valuation of property. plant, and equipment additions.
C. Making an independent estimate of the amount of FIFO inventory.
D. Inspecting employee time cards for proper approval by supervisors.
2. Which of the following sampling methods would be used to estimate a numerical measurement
of a population, such as a peso value?
A. Variable sampling
B. Altribute sampling
C. Random-number sampling
D. Stop-or-go sampling
3. Which of the following combinations results in a decrease in sample size in an attribute sample?
Allowable risk
Of assessing
Control risk Tolerable Expected Population
Too low Deviation rate Deviation rate
A. Increase increase Increase

B. Decrease increase decrease

C. Increase increase decrease
D. Increase decrease increase

4. In determining the number of documents to select for a test to obtain assurance that all sale s
returns have been property authorized, an auditor should consider the tolerable rate of deviation
from the control activity. The auditor should also consider the
Likely rate of deviations.
Allowable rick of assessing control risk too high.
A. Ionly
B. Il only
C. Both I and II
D. Either I or II
5. Which of the following factors is usually not considered in determining the sample size for a
test of controls?

A. Expected population deviation rate

B. Risk of assessing control risk too low
C. Tolerable deviation rate
D. Population size, when the population is large.

6 The sample size ofa test of controls varies inversely with

Tolerable Expected
Deviation rate (TDR) Deviation rate( EDR)
A. No No
B. Yes Yes
C. No Yes
D. Yes No

7 In
planning a
stausucan)forfoma testtheofpriorcontrols,
population deviation rate
an auditor increased the expected
year's rate :because of the results of the prior
year's test of controls and the overall control environment. The auditor most likely would then
7. In planning a statistical sample for a test of controls, an auditor increased the expected
population deviation rate (EDR) from the prior year's rate because of the results of the prior
year's test of controls and the overall control environment. The auditor most likely would then
increase the planned
A. Risk of as sessing control risk too low.
B. Sample size
C. Allowunce for sampling risk.
D. Tolerable deviation rate.

8. Which of the following courses of action would an auditor most likely follow in planning a
sample of cash disbursements if the auditor is aware of several unusually large cash
disbursements?
A. Continue to draw new samples until all the unusually large disbursements appear in the
sample.
B. Increase the sample size to reduce the effect of the unusually large disbursements.
C. Stratify the cash disbursements population so that the unusually large disbursements are
selected.
D. Set the tolerable rate of deviation at a lower level than originally planned.
9 A number of factors influence the sample size for a substantive test of details of an account
balance. All other factors being equal, which of the following would lead to a larger sample
size?
A. Smaler measure of tolerable misstatement.
B. Smaller expected frequency of errors.
C. Greater reliance on analytical procedures.
D, Greater reliance on internal control.
10. An auditor established a PI80, 000 tolerable misstatements for an asset with an account balance
of P3, (000,000. The auditor selected a sample of every 20h item from the population that
represented the asset account balance and discovered a net overstatement of P10, 500 (PI, 100
overstatements minus P600 understatements). Under these circumstances, the auditor most
likely would conclude that
A. The asset account is fairly stated because the tolerable misstatement exceeds the net of
projected actual overstatements and understatements.
B. The asset account is fairly stated because the total projected misstatement is less than the
tolerable misstatement.
C. There is an unacceptable high risk that the actual misstatements in the population exceed the
tolerable misstatements because the total projected misstatements exceeds the tolerable
misstatement.
D. There is an acceptably high risk that the tolerable misstatement is more than the sum of
actual overstatements and understatements.
11. Which of the following sample selection methods is not appropriate when using statistical
sampling?
A. Random selection
B. Systematic selection
C. Monetary unit sampling
D. Haphazard selection

12. Which of the following sample selection methods cannot ordinarily be used in audit sampling?
A. Value-weighted selection
B. Random selection
C. Block selection
D. Systematic selection

13. In audit sampling. involves dividing the population into discrete sub
populations which have an identifying characte ristic.
A. Value-weighted selection
B. Stratification
C. Random selection
D. Block selection

14. Which of the following statements relating to stratification is incorrect?

A. When performing test of details of translations and account balances, the population is often
stratified by monetary value.
B. The results of audit procedures applied to a sample of items within a stratum can be
projected to the entire population.
C. When verifying the valuation assertion for accounts receivable, account balances may be
stratified by age.
D. Stratification reduces the variability of items within each stratum.
 D. Stratification reduces the variability of items within each stratum.

15. Audit efficiency may be improved when the sampling unit is de finedas the individual monetary
units that comprise the population. This technique is called
A. Straification
B. Random selec tion
C. Systematic selection
D. Value-weighted selection

16. In designing audit procedures, the auditor is required to determine appropriate means of
selecting items for testing to gather audit evidence. Which of the following me ans is/are
available to auditor?
Selecting all items (100% examination)
Selecting specific items.
Audit sampling.
A. Iund II only
B. Il only
C. I and 1Il only
D, 1, II, and III

17. Which of the following should be considered by the auditor in deciding which means ( or
combination of means) to use in selecting items for testing?
The risk of material misstatement related to the assertion being tested.
Audit efficiency.

A. Ionly
B. li only
C. Both Iand II
D. Neither I nor II

18. It will be appropriate to audit all the items that make up a class of transactions or account
balance (100% examination), except
A. When the claSs of transactions or account balance consist of a large number of small value
items.
B. When the class of transactions or account balance consist of a small number of large value
items.
C. When there is a significant risk of misstatement and other selection methods do not provide
sufficient appropriate audit evidence.
D. When the repetitive nature of a calculation or other process performed automatically by the
clients computer information system (CIS) makes a 100% examination cost effective.

19. PSA 500 states that the auditor may decide to select specific items from a population based on
such factors as the auditor's understanding of the entity, the assessed risk of material
misstatement, and the characteristic of the population being tested, specific items that may be
selected for testing usually include the following. except
A. Items that are of high value.
B. Items that are suspicious, unusual, risk-prone, or havea history of error.
C. All items whOse values do not exceed a certain amount so as to verify only a small
proportion of the total amount of class of transactions or account balance.
D. Items that provide information matters such as the nature of the entity, the nature of
transactions, and internal control.

20. Audit sampling involve the

A. Selection of all items over a certain amount.
B. Applications of audit procedures to less than 100% of items within a class of transactions or
an account balance such that all items have a chance of selection.
C. Application of audit procedures to all items that comprise a class of transactions or an
account balance.
D. Application of audit procedures to all items Over a certain amount and those that are
unusual or have a history of error.

21. Which of the following sample planning factors would influence the sample size for a
subs tanti ve test of details for a specific account?
21. Which of the following sample planning factors would influence the sample size fora
substanti ve test of details for a specific account?
Expected Amount Measure of
Of Misstatements Tolerable Misstatements'
A. Yes Yes
B. No No
C. Yes N
D. No Yes
22. An error that arises from an isolated event that has not recured other than on specifically
identifiable occasions and in therefore not representative of similar errors in the population is
a/an
A. Anomalous erTOr
B. Isolated error.
C. Scundalous error.
D, Non-recurring error.

23. Which of the following statements concerming projection of errors found in the sample to the
population is incorrect?
A. For test of details, the auditor should project monetary errors found in the sample to the
population, and should consider the effect of the projected error on the audit objective and
on other areas of the audit.
B. Anomalous eTOrs found in the sample should be included in the projection of errors to the
population.
C. For test of controls, no explicit projection of erors is necessary since the sample deviation
rate is also the projected deviation rate for the population as a whole.
D. If a class of transactions or an account balance has been divided into strata, the error is
projected for each stratum separately.
24. In estimation sampling for variables. which of the following must be known to estimate the
appropriate sample size required to meet the auditor's need in a given situation?
A. The estimated deviation rate in the population.
B. The qualitative aspects of misstatements.
C. The estimated population value.
D. The acceptable level of risk.
25. In applying variables sampling. an auditor attempts to
A. Predict a monetary population value within a range of precision.
B. Estimate a qualitative characteristic of interest.
C. Determine various rates of occurrence for specified attributes.
D. Discover at least one instance of a critical deviation.
26. When planning a sample for a substantive test of details, an auditor should consider tolerable
misstatements for the sample. This consideration should
A. Not be changed during the audit process
B. Be related to the auditors business risk.
C. Be related to preliminary judgments about materiality levels.
D. Not be adjusted for qualitative factors.
27. An auditor may decide to increase the risk of incorect rejection when
A. The cost and effort of selecting additional sample items are low.
B. Increased reliability from the sample is desired.
C. Many differences (audit value minus recorded value) are expected.
D. Initial sample results do not support the planned level of control risk.
28. In statistical sampling me thods used in substantive testing, an auditor most likely would stratify
apopulation into meaningful groups i
A. Probability -proportional-to-ize (PPS) sampling is used.
B. The population has highly variable recorded amounts.
C. The standard deviation og recorded amounts is relatively small.
D. The auditors estimated tolerable misstatement is extremely small.

29. Which of the following statements is true concerning statistical sampling in tests of controls?
A. For a given tolerable rate, a larger sample size should be selected as the expected population
deviation rate decreases.
29. Which of the following statements is true concerning statistical sampling in te sts of controls?
A. For a given tolerable rate, a larger sample size should be selected as the expected population
deviation rate decreases.
B. As the population size doubles, the sample size should also double.
C. The expected population deviation rate has a little or no effect on determining sample size
except for very small populations.
D. The population size has a little or no effect on determining sample size except for very small
populations.
30. Which of the following statements is correct concerming statistical sampling in tests of controls?
A. In determining the tolerable rate, an auditor considers detection risk and the sample size.
B. Deviations from specific control activities at a given rate ordinarily result in misstatements
at a lower rate.
C. As the population size increases, the sample size should increase proportionately.
D. There is an inverse relationship between the expected population deviation rate and the
sample size.

31. An auditor plans to examine a sample of 20 purchase orders for proper approvals as prescribed
by the clients internal control. One of the purchase orders in the chosen sample of 20 cannot be
found, and the auditor is unable to use altermative procedures to test whether the purchase order
was properly approved. The auditor should
A. Choose another purchase order to replace the missing purchase order in the sample.
B. Select a completely new set of 20 purchase orders.
C. Consider this test of controls invalid and proceed with substantive test because intermal
control is ineffective.
D. Treat the missing purchase order as a deviation for the purpose of evaluating the sample.
32. An attribute sampling plan may be used to test the effectiveness of controls. The auditors
evaluation of the sampling results ordinarily leads to a conclusion concerning
A. The relation of the population deviation rate to the tolerable rate.
B. Monetary precision exceeding a certain predetermined armount.
C. The population value not being misstated by more than a predetermined amount.
D. Population characteristic occurring at least once in the population.
33. As a result of sampling proDcedures applied as tests of controls, an auditor incorTectly assesses
control risk lowers than appropriate. Which of the following is the most likely explanation for
this situation?
A. The deviation rate in the auditors sample exceeds the tolerable rate, but the deviation rate
In the population is le ss than the tolerable rate.
B. The devia tion rate in the auditors sample is less than the tolerable rate, but the deviation rate
in the population exceeds the tolerable rate.
C. The deviation rates of both the auditors sample and the popultion are less than tolerable rate.
D. The deviation rates of both the auditors sample and the population exceed the tolerable rate.
34. The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the
a. Effectiveness of an audit.
b. Efficiency of the audit.
c. Tolerable misstatement.
d. Preliminary estimates of materiality levels
35. Which of the following statements best describes the concept of sampling risk?
A. A randomly chosen sample may not be representative of the population as a whole on the
characteristic of interest.
B. The documents related to the chosen sample may not be available for inspection.
C. An auditor may fail to recognize erors in the documents examined for the chosen sample.
D. An auditor may select audit procedures that are not appropriate to achieve the specific
object.

PART II.

1. Three common variations of nonstatistical sampling

I. Haphazard Sampling
2. Block Selection
3. Judgnental Sampling
2. The auditor may decide to select specific items from the population these may include
1. High value or key items
2. All items over a certain amount
3. Items to obtain information
4. Itens to test procedures