Question 1: The most common objective of PPS sampling plans is to:
a.determine the rate of deviation from a control procedure.
b.estimate the true dollar value in an unrecorded account.
c.establish that the rate of deviation from a control procedure does not exceed the established tolerable rate.
d.independently estimate the value of a class of transactions.
e.obtain evidence that a recorded account balance is not materially misstated.
Question 2: Which of the following statements is true about the determination whether to use statistical attribute sampling or nonstatistical sampling?
a.Statistical attribute sampling is usually the best way to select exception reports to test the effectiveness of the manual follow-up procedure.
b.For controls that function infrequently, such as controls over management discretion in financial reporting that occur only quarterly, nonstatistical sampling is probably the most efficient way to determine how often the auditor wants to test the effectiveness of the control.
c.Nonstatistical sampling is most effective for larger populations.
d.Statistical sampling has become the norm for tests of controls.
e.Statistical sampling should always be used in tests of general controls, such as inspecting logs that document program changes, were the auditor wants to review the entire population but uses sampling to choose specific items to investigate a sample of the individual items.
Question 3: Which of the following is not an example of a significant inherent risk?
a.Management override of internal controls.
b.The impact of technological developments.
c.Inadequate accounting skills.
d.Management turnover.
e.Contentious accounting issues.
Question 4: The risk that a material misstatement that could occur in an assertion will not be prevented or detected on a timely basis by the entity's internal controls is
a. control risk.
b. analytical procedures risk.
c. tests of details risk.
d. Inherent risk.
e. audit risk.