SOLVED

24) The acceptable risk of assessing control risk too low is: A) The risk that the auditor is willing to take of accepting a control as ineffective when it is effective The risk that the auditor is willing to take of accepting a control as effective when it is ineffective Yes Yes B) The risk that the auditor is willing to take of accepting a control as ineffective when it is effective The risk that the auditor is willing to take of accepting a control as effective when it is ineffective No No C) The risk that the auditor is willing to take of accepting a control as ineffective when it is effective The risk that the auditor is willing to take of accepting a control as effective when it is ineffective Yes No D) The risk that the auditor is willing to take of accepting a control as ineffective when it is effective The risk that the auditor is willing to take of accepting a control as effective when it is ineffective No Yes 25) When using statistical sampling, the auditor would most likely require a smaller sample if the: A) population increases. B) desired reliability decreases. C) desired precision interval narrows. D) expected exception rate increases. 26) Whenever auditors use sampling, they risk making incorrect conclusions about the population. For audit sampling of tests of transactions this risk is known as: A) acceptable risk of assessing control risk too low. B) acceptable risk of assessing transaction testing as too low. C) risk that the sample is not representative of the population. D) risk that the sample conclusions cannot be useful because of non-probability sampling. 27) When deciding on the acceptable risk of assessing control risk too low, the auditor needs to: A) rely on his/her professional judgment. B) err on the side of conservatism. C) consult the professional standards. D) follow SEC guidelines. 28) The difference between the tolerable exception rate and the estimated population exception rate is called: A) accuracy of the initial sample estimate. B) inflation factor of the initial sample estimate. C) precision of the initial sample estimate. D) reliability of the initial sample estimate. 29) If the result obtained from a particular sample for control and substantive tests of transactions is critical to the formation of an audit opinion, which of the following is the most important to the auditor in concluding of the appropriateness and sufficiency of evidence gathered? A) Acceptable risk of assessing control risk too low. B) Estimated population exception rate. C) Tolerable exception rate. D) Size of the population. 30) The tolerable rate of exceptions for tests of controls is generally: A) lower than the expected rate of errors in the related accounting records. B) higher than the expected rate of errors in the related accounting records. C) identical to the expected rate of errors in the related accounting records. D) unrelated to the expected rate of errors in the related accounting records. 31) Which of the following results in a larger sample size? A) decrease the desired confidence level and decrease the tolerable deviation rate B) increase the desired confidence level and decrease the tolerable deviation rate C) decrease the desired confidence level and increase the tolerable deviation rate D) increase the desired confidence level and increase the tolerable deviation rate 32) An auditor plans to examine a sample of 40 canceled checks for a countersignature which is prescribed in the client’s control procedures manual. Two of the checks in sample cannot be located by the company or the auditor. The auditor would most likely: A) treat the missing checks as a deviation when evaluating the results of the sample. B) draw a conclusion on a sample size of 38. C) substitute two more checks to get to a sample size of 40. D) recalculate the sample excluding the original 40 checks.