 Show Audit Sampling (Test of Control) 1. The entire set of data from which a sample is selected and about which the auditor wishes to draw conclusions is A. Population B. Sample C. Sampling unit D. Database 2. The risk that the auditor's conclusion based on a sample may be different from the conclusion if the entire population were subjected to the same audit procedure is A. Sampling risk B. Non-sampling risk C. Risk of incorrect rejection D. Risk of incorrect acceptance 3. A 3. Sampling risk that leads the auditor to conclude that controls are more effective than they actually are is A. Risk of assessing control risk too low B. Risk of assessing control risk too high C. Risk of incorrect rejection D. Risk of incorrect acceptance 4. C 4. Sampling risk that leads the auditor to conclude that a material misstatement exists when in fact it does not is A. Risk of assessing control risk too low B. Risk of assessing control risk too high C. Risk of incorrect rejection D. Risk of incorrect acceptance 5. D 5. Of the four erroneous conclusions from a sampling risk, the auditor is primarily concerned with A. Risk of assessing control risk too low B. Risk of assessing control risk too high C. Risk of incorrect rejection D. Risk of incorrect acceptance 6. B 6. Which is not true of an "Alpha risk" in sampling? I. It is the risk of assessing control risk too high or the risk of incorrect rejection. II. It relates to the effectiveness of the audit. III. It usually leads the auditor to additional work to establish that initial conclusions were incorrect. A. I and II only B. I and III only C. II and III only D. I, II, and III 7. The likelihood of assessing control risk too high is the risk that the sample selected to test controls A. Does not support the auditor's planned assessed level of control risk when the true operating effectiveness of the control structure justifies such an assessment B. Contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transactions classes C. Contains proportionately fewer monetary errors or deviations from prescribed controls than exist in the balance or class as a whole D. Does not support the tolerable error for some or all of management's assertions 8. B 8. A misstatement or deviation that is demonstrably not representative of misstatements or deviations in a population A. Sampling risk B. Anomaly C. Error D. Corruption Audit Sampling PSA 530 (Test of Controls) 9. The process of dividing a population into subpopulations, each of which is a group of sampling units which have similar characteristics (often monetary value) is A. Division B. Stratification C. Grouping D. Characterization What is the tolerable rate of deviation in auditing?The tolerable deviation rate is the largest percentage variance experienced in audit sampling that an auditor will accept in order to rely upon a specific control. If the deviation rate is higher than this threshold value, then the auditor cannot rely upon the control.
When the sample deviation rate exceeds the tolerable deviation rate the auditor may conclude that?On the other hand, if the sample includes, for example, two or more deviations, the auditor may conclude that there is an unacceptably high sampling risk that the rate of deviations in the population exceeds the tolerable rate of 5 percent. An auditor applies professional judgment in making such an evaluation.
How is audit deviation rate calculated?After completing the audit procedures, the auditor summarizes the deviations for each control tested and evaluates the results. For example, if the auditor discovered two deviations in a sample of 50, the deviation rate in the sample would be 4% (2 ÷ 50).
What is tolerable deviation rate quizlet?Sampling risk. Definition of tolerable deviation rate. The maximum deviation rate from a prescribed control that the auditor is willing to accept and still consider the control effective.
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