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AUD > Module 7 Audit Sampling > Flashcards

Module 7 Audit Sampling Flashcards

1
Q

What two items make up Detection Risk?

A

Detection Risk is the produce of Test of Details Risk, and Analytical Procedures Risk.

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2
Q

What is a Dual Purpose Test?

A

A dual purpose test are those in which a single sample is used to test a control AND serve as a substantive test.

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3
Q

What kind of sampling is used in a test of controls?

A

Attributes Sampling

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4
Q

What type of sampling is used for a test of details (transactions, balances, etc)?

A

Variables sampling

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5
Q

What is stratified sampling?

A

The sampling of a population with two or characteristics. The percent of each characteristic over the total population is calculated and then multiplied by the total sample number to give the sample number of each characteristic.

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6
Q

What is systematic sampling?

A

Every nth item of a population is selected after a random start. (If the population is arranged randomly, systematic selection is essentially the same as random number selection.

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7
Q

What is Haphazard sampling?

A

A sample selected without any conscious bias. But is still representative of the population.

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8
Q

What is the least desirable method of sampling?

A

Block Sampling

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9
Q

What is block sampling?

A

Selecting a random block as the population Example: For a population of invoices, picks invoice numbers 1000 through 1049.

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10
Q

What is the Sample Size Equation, and what are its parts?

A

n = Sample Size

N = Population Size

SD - Esimated population standard deviation

Ur = The standard normal deviate for the acceptable risk of incorrect rejection

A = Planned allowance for sampling risk

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11
Q

For the Sample Size equation, what formula is used to adjust the sample size so that is can be adjusted by a finite correction factor?

And what are its parts?

A

n = Sample Size

N = Population Size

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12
Q

What is the tolerable deviation rate a fuction of?

A

The planned assessed level of control risk
AND
the degree of assurance desired by the sample

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13
Q

How is the allowance for sampling risk calculated?

A

Sample Deviation Rate - Upper Deviation Limit

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14
Q

What is a Type I Error, and how does it affect the audit?

A

Risk of incorrect rejection. Impacts audit efficiency

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15
Q

What is a Type II Error, and how does it affect the audit?

A

Risk of incorrect acceptance. Impacts audit effectiveness

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16
Q

What are the steps in Variables Sampling?

A

Determine OBJECTIVES of the test
Define the POPULATION
Select an audit SAMPLING TECHNIQUE
Determine the SAMPLE SIZE
Determine the METHOD OF SELECTING THE SAMPLE
Perform the SAMPLING PLAN
Evaluate the SAMPLE RESULTS
DOCUMENT THE SAMPLING PROCEDURE

17
Q

What are the steps in Probaility-Proportional-to-Size sampling?

A
  1. Determine OBJECTIVES of the test
  2. Define the POPULATION
  3. Select an audit SAMPLING TECHNIQUE
  4. Determine the SAMPLE SIZE
  5. Determine the METHOD OF SELECTING THE SAMPLE
  6. Perform the SAMPLING PLAN
  7. Evaluate the SAMPLE RESULTS
  8. DOCUMENT THE SAMPLING PROCEDURE
    (Same steps as Variables Sampling)
18
Q

How is the Tolerable Rate calculated?

A

Allowance for sampling risk+Expected Deviation Rate

19
Q

How is the Upper Deviation rate calculated?

A

Allowance for sampling risk+Actual Deviation Rate

20
Q

How should the audit be handled after the Actual Deviation Rate plus the Allowance for Sampling Risk is calculated?

A

If (Actual Deviation Rate + Allowance for Sampling Risk) > Tolerable Rate,

modify Planned assess level of control risk

This applies to Attributes Sampling (Test of Controls)

21
Q

For the Probability Proportional to Size Sampling, what is the formula for the calculation of the sample size?

A

(Book Value of Population x Reliability Factor) / ((Tolerable Misstatement - (Expected misstatement x expansion factor))

22
Q

For the Probability Proportional to Size Sampling, what is the formula for the calculation of the sampling interval?

A

Book Value of population / Sample Size

AUD (31 decks)

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