SOLVED

Learning Objective 15-7 1) A principal advantage of statistical methods of attributes sampling over nonstatistical methods is that they provide a scientific basis for establishing the: A) risk of assessing control risk too low. B) tolerable exception rate. C) expected population exception rate. D) sample size. 2) In using sampling distribution for attributes, which one of the following must be known to evaluate the sample results? A) Estimated dollar value of the population. B) Standard exception of the values in the population. C) Actual exception rate of the attribute in the population. D) Sample size. 3) When audit procedures have been completed for an attributes sampling application, the auditor must generalize from the sample to the population. Which of the following statements would be incorrect regarding this process? A) The auditor would use an attributes sampling table to determine the computed upper exception rate. B) The computed upper exception rate is the highest exception rate in the population that the auditor is willing to accept. C) It would be wrong for the auditor to conclude that the population exception rate is exactly the same as the sample exception rate. D) In selecting the table corresponding to the risk of overreliance, it should be the same as the ARACR used for determining the initial sample size. 4) What is an auditor’s evaluation of a statistical sample for attributes when a test of 100 documents results in four exceptions if the tolerable exception rate is 5%, the expected population exception rate is 3%, and the allowance for sampling risk is 2%? A) Accept the sample results as support for planned reliance on the control because the tolerable rate less the allowance for sampling risk equals the expected population exception rate. B) Modify planned reliance on the control because the sample exception rate plus the allowance for sampling risk exceeds the tolerable rate. C) Modify planned reliance on the control because the tolerable rate plus the allowance for sampling risk exceeds the expected population exception rate. D) Accept the sample results as support for planned reliance on the control because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate. 5) In the evaluation of the results of an attributes sample, the fact that the exception rate in the sample was 2% rather than the estimated population exception rate of 4% would cause the computed upper exception rate to: A) be less than the tolerable exception rate. B) equal the tolerable exception rate. C) exceed the tolerable exception rate. D) cannot be determined from the information given. 6) If the size of the sample to be used in a test of attributes is not determined by using statistical concepts, but the sample is chosen in accordance with random selection procedures: A) no inferences can be drawn from the sample. B) the auditor has committed a nonsampling error. C) the auditor may or may not achieve the tolerable exception rate at the acceptable risk of assessing control risk too low. D) the auditor will have to evaluate results using the principles of discovery sampling.