and Generalized Audit Software
1. Audit sampling implies the gathering of evidence to use as a basis for making valid
inferences about the characteristics of the population as a whole without examining
every transaction.
True False
2. Audit sampling is the application of an audit procedure to less than 100 percent of the
items within an account balance or class of transactions for the purpose of evaluating
some characteristic.
True False
3. When performing substantive tests using sampling methods, the auditor's main
concern is the risk of incorrect rejection.
True False
4. The risk of incorrect acceptance of an account balance as correct, when in fact it is not
correct, bears directly on the effectiveness of an audit.
True False
5. The tolerable misstatement is the confidence level needed to infer population values.
True False
6. Statistical sampling is used when an auditor chooses to examine all purchases of
equipment exceeding $1,000.00 and to test the remaining items by analytical
procedures.
True False
,7. The most efficient method of testing a large population is the use of non-statistical
sampling.
True False
8. Statistical sampling assists auditors in determining the sufficiency of evidence
gathered.
True False
9. When testing controls, the use of haphazard selection of a sample allows for random,
statistical evaluation.
True False
10. The tolerable failure rate is the level at which the control’s failure to operate would
cause the auditor to conclude that the control is not effective and would likely change
the auditor’s planned assessment of control risk in performing tests of account
balances..
True False
11. The expected population deviation rate is the auditor's best estimate of the
percentage of transactions processed for which a control is not effectively applied.
True False
12. An attribute is defined as a characteristic of the population of interest to the auditor.
True False
13. The sample size decreases as the risk over over-reliance decreases.
True False
14. For tests of controls, the most commonly used statistical method is attribute
sampling.
True False
,15. Increasing the expected failure rate will cause the sample size to increase.
True False
16. Sample size varies directly with sampling risk.
True False
17. An auditor uses sampling to determine the reasonableness of an account balance by
performing detailed analysis of the selected items making up the account balance.
True False
18. The auditor must define the population to which sampling relates if the auditor is to
use statistical sampling for substantive tests of account balances.
True False
19. The individual auditable elements defined by the auditor are the sampling units.
True False
20. The most common statistical approaches for substantive testing are classical
variables sampling and MUS.
True False
21. Non-statistical samples should be based on the same audit considerations as those
used for statistical sampling.
True False
22. Random sampling can be used to determine sample size or evaluate sampling results
even if the auditor does not plan on using statistical sampling.
True False
23. Either nonstatistical or statistical sampling is appropriate for substantive tests of
details.
True False
, 24. Monetary unit sampling (MUS) sampling is designed to test whether there is an
acceptable risk of account balance understatement.
True False
25. Monetary unit sampling (MUS) results in an efficient sample size and concentrates on
the dollar value of the account balances.
True False
26. Sample size in a MUS sample is a function of risk of incorrect acceptance, tolerable
misstatement, and expected misstatement.
True False
27. The population for MUS is defined as the number of dollars in the population being
tested.
True False
28. Sampling risk is defined as the risk that an inference drawn from a sample will be
incorrect.
True False
29. Projected misstatements are developed by extrapolation from the misstatements in
sample items to the population.
True False
30. When evaluating an MUS sample, if the auditor finds no misstatements in the
sample, the misstatement projection is zero dollars, and the total estimated
misstatement will equal the projected misstatement for items in lower-stratum.
True False
31. Population items with zero balances have no chance of being selected using PPS
sampling.
True False