Sampling

1. D. Choosing a sample which has proportionately more errors than the population.
Option A incorrect because it is related to procedural risk, which involves using inappropriate audit procedures.
Option B is incorrect because it is associated with detection risk, which is the risk of not detecting errors or deviations.
Option C is also incorrect because it is more related to statistical risk, which involves errors in statistical analysis.

2. C. Testing a number of items less than the entire population.

Option A is related to procedural risk, which involves using inappropriate audit procedures.
Option B is associated with detection risk, which is the risk of not recognizing exceptions or errors.
Option D is associated with control risk, which arises from weaknesses in the client's internal control system.

3. C. Even though a sample is properly chosen, it may not be representative of the population.
A is related to the choice of statistical methods, and it pertains to methodological or procedural risk.
B is associated with detection risk, which is the risk of failing to recognize errors in the sample.
D is related to the determination of confidence level and precision in statistical sampling, but it doesn't specifically
refer to the representativeness of the sample

4. A. Use of inappropriate or ineffective audit procedures.

Option B is a cause of sampling error that occurs when the sample is not selected randomly from the population.
Option C is another cause of sampling error that occurs when the sample does not accurately represent the
population.
Option D is also cause of sampling error that occurs when the auditor uses the wrong type of sampling method.

5. A. Measures quantitatively the risk from testing only a part of the audit population.
Option B is incorrect as statistical sampling requires more work than non-statistical sampling, but it provides a higher
degree of confidence in the results.
Option C is incorrect as statistical sampling does not replace auditor’s judgment with quantitative measures, but it
helps the auditor to make more informed decisions based on the data collected.
Option D is incorrect as measuring the reliability of misstatements is not a purpose of statistical sampling, but it helps
the auditor to estimate the extent of misstatements in the population.

6. D. Measuring the sufficiency of evidential matter.

Option A is incorrect as statistical sampling does not define materiality, but it helps the auditor to estimate the extent
of misstatements in the population
Option B is incorrect as statistical sampling requires more work than nonstatistical sampling, but it provides a higher
degree of confidence in the results
Option C is incorrect as statistical sampling does not eliminate auditor’s judgment in testing, but it helps the auditor to
make more informed decisions based on the data collected

7. A. Quantify and control sampling risk.

Option B is incorrect as statistical sampling does not eliminate any type of non-sampling errors, but it helps the auditor
to estimate the extent of misstatements in the population.
Option C is incorrect as statistical sampling does not guarantee smaller sample sizes in all cases, but it helps the auditor
to make more informed decisions based on the data collected.
 Option D is incorrect as statistical sampling requires more complex formulas than those required to evaluate non-
statistical samples, but it provides a higher degree of confidence in the results.

8. A. Statistical sampling is a mathematical approach to inference, whereas non-statistical sampling is a more subjective
approach.
Option B is not accurate. Statistical sampling is often applied to large populations, and the sample size is determined
based on statistical principles. The size of the population does not necessarily determine the applicability of statistical
sampling.
Option C is not accurate. While nonstatistical sampling may be more subjective, it does not necessarily produce greater
consistency in the application of audit judgment. Statistical sampling provides a more standardized and objective
framework.
Option D is not accurate. Nonstatistical sampling is not inherently more applicable to populations that lend themselves
to random selection. The choice between statistical and nonstatistical sampling depends on various factors, including
the audit objectives and the characteristics of the population.

9. A. use an appropriate method of selecting sample items from the populations.

Option B relates to procedural risk, which involves the design and execution of audit procedures.
Option C is more related to control risk and the effectiveness of the audit team but is not directly addressing sampling
risk.
Option D is a distinction between variables sampling and attributes sampling and may not necessarily reduce sampling
risk. Both types of sampling have their applications depending on the audit objectives and the nature of the population
being sampled.

10. B. haphazard selection.

Option A involves selecting contiguous items in the population, often in a sequence or "block," which is different from
haphazard selection.
Option C involves selecting items at regular intervals from the population, which is different from haphazard selection.
Option D is a broad term that may include various methods, including systematic, random, or stratified sampling.
Haphazard selection is not typically considered a statistical sampling method.

11. B. inverse.
Option A, C, and D are incorrect because the relationship of tolerable deviation rate to the sample is inverse. As the
tolerable deviation rate decreases, the sample size increases, and vice versa.

12. B. indirect.
Option A, C, and D are incorrect because the acceptable risk of assessing control risk too low in relation to the sample
size is indirect. As the acceptable risk of assessing control risk too low decreases, the sample size increases, and vice
versa.

13. A. tolerable deviation rate.

Option B is incorrect as the estimated population deviation rate is the auditor’s best estimate of the deviation rate in
the population.
Option C is incorrect as the acceptable risk of assessing control risk too low is the risk that the auditor is willing to
accept that the control risk is lower than the assessed level of control risk.
 Option D is incorrect as the sample deviation rate is the actual deviation rate found in the sample.

14. C. For a given tolerate rate, a larger sample size should be selected as the expected population deviation rate
decreases.
Option A is incorrect as the expected population deviation rate has a significant effect on the sample size.
Option B is incorrect as the sample size does not increase proportionally with the population size, but it depends on
the desired level of precision and confidence.
Option D is incorrect as the population size has a significant effect on the sample size, and larger populations require
larger sample sizes to achieve the same level of precision and confidence.

15. A. Population size

Option B is a factor that is considered because it relates to the auditor's willingness to accept the risk of not detecting
control deficiencies.
Option C is a critical factor in determining the sample size. It represents the maximum rate of deviations from the
prescribed control procedure that the auditor is willing to accept without modifying the planned assessed level of
control risk.
Option D is also considered in determining the sample size because it influences the precision of the sample results.

16. C. Increase; Increase; Decrease

Option A, B, and D are incorrect because for the risk assessing control risk too low, there is an inverse relationship
between the acceptable sampling risk and sample size. The smaller the sampling risk, the larger the sample size would
be. For the tolerable deviation rate, it is inversely related to the sample size. A decrease in the tolerable deviation rate
will cause the sample size to increase. And lastly, for the Expected population deviation rate, it has a direct effect in the
sample size so the larger the expected population deviation rate, the larger the sample size would be.

17. A. increase.
Option B, C, and D are incorrect because higher expected population deviation rate implies a higher likelihood of
finding deviations in the population. To maintain the same level of confidence and precision in the audit conclusion,
the auditor would need a larger sample size to capture the increased expected deviation rate more accurately.

18. B. The higher the expected occurrence rate, other factors remaining unchanged, the larger will be the sample size.
Option A is incorrect as an increase in the tolerable occurrence rate, other factors remaining unchanged, decreases the
sample size.
Option C is incorrect as the more critical the attribute being tested, the lower will be the tolerable occurrence rate set
by the auditor, and the smaller will be the sample size.
Option D is incorrect as the lower the acceptable risk of underassessment of control risk, the larger will be the sample
size.

19. A. Population size.

Option B, C, and D are all factor that affects the sample size. Reliability is a measure of the accuracy and
consistency of the data collected. Precision interval is the range within which the true population value is
expected to lie with a certain degree of confidence. Standard deviation is a measure of the variability of the
data.
20. D. Population estimates with measurable reliability can be made.
Option A is incorrect as judgment is required in selecting the sample and interpreting the results.
Option B is incorrect as a larger sample size is usually required to achieve the same level of precision and confidence as
a judgmental sample.
Option C is incorrect as the accuracy of the results depends on the quality of the data collected and the assumptions
made in the statistical analysis.

Concepts
1. B. In all matters relating to the assignment, an independence in the mental attitude is to be maintained by the auditor
or auditors.
Option A is incorrect because the work is to be adequately planned, and assistants, if any, are to be properly
supervised is related to the application of statistical sampling technique.
Option C is incorrect because sufficient understanding of internal control is to be obtained to plan the audit and to
determine the nature, timing, and extent of the tests to be performed is related to the application of statistical
sampling technique.
Option D is also incorrect because sufficient competent evidential matter is to be obtained through inspection,
observation, inquiries, and confirmations to afford a reasonable basis for an opinion about the financial statements
under audit is related to the application of statistical sampling technique.

2. D. Representative sample.
Option A is a sample selected randomly from the population, but it does not guarantee that the sample is
representative unless randomness is sufficient to ensure representativeness.
Option B and Option C refer to different types of sampling methods that focus on either numerical measurements
(variables) or qualitative characteristics (attributes), but they do not inherently imply representativeness.

3. D. Variables sampling.
Option A is used when the auditor is concerned with the presence or absence of a certain characteristic in a
population.
Option B is a term not commonly used in auditing and is not specifically associated with estimating averages.
Option C is generally used in the context of evaluating the quality or acceptance of a batch or lot based on a sample.

4. B. Sample.
Option A and C are considered in determining the sample size for a test of controls.
Option D is sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and
confirmations to afford a reasonable basis for an opinion about the financial statements under audit.

5. A. A randomly chosen sample may not be representative of the population as a whole on the characteristics of
interest.
Option B refers to procedural risk, where inappropriate audit procedures are chosen for the specific objective.
Option C is related to detection risk, where the auditor may fail to recognize errors in the sample.
Option D is more related to non-sampling risk, where external factors such as missing documents affect the audit
process.
6. B. Provide a mathematical measurement of risk.
Option A is not specific to statistical sampling and can be relevant to both statistical and non-statistical sampling.
Option C is not necessarily true, as the conclusive nature of audit evidence depends on various factors beyond the
sampling method.
Option D, while statistical sampling can enhance the defensibility of the audit approach, the unique advantage
primarily lies in the mathematical measurement of risk.

7. C. Allow the auditor to quantify, and therefor control, the risk of making an incorrect decision based on sample
evidence.
Option A is not the primary reason for using statistical sampling. While it may result in smaller sample sizes in some
cases, the key focus is on controlling the risk associated with sample evidence.
Option B is related to obtaining a more representative sample, but the primary emphasis is on risk quantification and
control.
Option D is not a primary reason; compliance with auditing standards may be a requirement, but the primary
advantage of statistical sampling lies in risk quantification.

8. B. Proper supervision and instruction of the audit team members.

Option A is related to the supervision and instruction of the client's employees, which is important but may not directly
reduce nonsampling risk for the auditor.
Option C is related to the choice between attributes and variables sampling methods, which is more of a sampling
technique rather than a direct method to reduce nonsampling risk.
Option D is related to sampling risk and the representativeness of the sample, which is not directly addressing
nonsampling risk.

9. A. Risk of incorrect acceptance.

Option B is the risk that the auditor concludes there is a material misstatement when, in fact, there isn't. This is not a
subdivision of detection risk but rather a component of audit risk.
Option C is a separate component of audit risk and represents the risk that internal controls will not prevent or detect
material misstatements. It is distinct from detection risk, which pertains to the risk that audit procedures fail to detect
material misstatements.
Option D is the overall risk that the auditor expresses an inappropriate audit opinion when the financial statements are
materially misstated. Detection risk is just one component of audit risk, and it is further divided into the risk of
incorrect acceptance and the risk of incorrect rejection.

10. D. An advantage of using statistical sampling is that the cost/benefit ratio is always positive.
Option A and B are correct because both statistical and non-statistical sampling methods are acceptable, and auditors
can choose the method that is most appropriate for the audit objectives and circumstances.
Option C is correct. One of the primary benefits of statistical sampling is indeed the quantification of sampling risk,
allowing auditors to measure and control the risk associated with using a sample to make inferences about a
population.

11. D. Predict a monetary population value within a range of precision.

Option A describes estimation of a qualitative characteristic, which is more aligned with attributes sampling.
 Option B is related to attributes sampling, where the auditor assesses the occurrence or non-occurrence of specified
attributes.
Option C does not specifically relate to variable sampling; it mentions the discovery of a critical error, which may be a
concern in various audit procedures but is not the primary focus of variable sampling.

12. D. Conclusions may be drawn in more precise ways when using statistical sampling method.
Option A is not a valid criticism; it states that certain audit tests must be performed outside a statistical sampling
context, but this does not necessarily criticize the use of nonstatistical sampling.
Option B is not a criticism against nonstatistical sampling methods. The cost of performing random selection or testing
is more associated with the practicalities of the sampling process rather than a criticism of the method itself.
Option C is not a valid criticism. It suggests that nonstatistical sampling does not differ substantially from statistical
sampling, which may be true to some extent, but it does not inherently criticize the use of nonstatistical methods.

13. C. It is not acceptable to make non-statistical evaluation using probabilistic selection.

Option A is correct. In probabilistic selection, every population item has a known chance of being selected, which is a
fundamental characteristic of probabilistic sampling methods.
Option B is correct. Probabilistic selection is indeed required for all statistical sampling methods. Probabilistic sampling
methods use random selection to ensure that each item in the population has a chance of being included in the
sample, which is essential for statistical inference.
Option D is correct. Both probabilistic and nonstatistical sampling methods are acceptable and commonly used in
auditing. The choice between them depends on the audit objectives, the nature of the population, and other relevant
factors.

14. C. Probability proportional to size sample selection

Option A involves selecting items based on the auditor's judgment or specific criteria, making it a nonstatistical
approach.
Option B involves selecting contiguous items in the population without regard to their characteristics, making it a
nonstatistical approach.
Option D involves selecting items without any specific order or pattern, and it is a nonstatistical approach.

15. C. Block sample selection.

Options A, B, and D are sample selection methods commonly associated with statistical audit sampling. Simple random
sample selection involves selecting items randomly from the population. Systematic sample selection involves selecting
items at regular intervals from the population. Stratified sample selection involves dividing the population into
subgroups and then selecting samples independently from each stratum based on certain characteristics

16. B. does not allow sampling risk to be objectively measured.

Option A is not a major weakness of nonstatistical sampling. In fact, nonstatistical sampling often requires smaller
sample sizes compared to statistical sampling.
Option C is a potential weakness of nonstatistical sampling. Depending on the method used for sample selection, there
is a risk that the sample may not be representative of the population.
Option D is not a major weakness of nonstatistical sampling. The accuracy of point estimates may vary, but the inability
to objectively measure sampling risk is a more significant weakness.
17. C. Sampling methods are used by auditors in both testing of controls and substantive testing.
Option A is incorrect. GAAS do not explicitly require the use of statistical sampling methods whenever the auditor
decides to examine only a part of the population. The choice between statistical and nonstatistical sampling methods
depends on various factors, including the audit objectives and characteristics of the population.
Option B is incorrect. While statistical sampling is commonly applied to substantive testing, it is not restricted to
substantive testing and can also be used for testing controls.
Option D is incorrect. The appropriateness of statistical sampling methods is not solely determined by the method of
testing controls. The choice depends on various factors, including the nature of the audit and the characteristics of the
population.

18. B. Risk of not identifying a misstatement included in a sample.

Option A or the risk of assessing control risk too high is an aspect of sampling risk.
Option C or the tolerable rate is considered in determining the sample size for a test of controls.
Option D or the sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and
confirmations to afford a reasonable basis for an opinion about the financial statements under audit.

19. D. The same audit procedures are performed in the same manner for either statistical or non-statistical sampling.
Option A is incorrect as the audit procedures do not vary as a result of using either statistical or nonstatistical sampling.
Option B was incorrect because it stated that the audit procedures will be the same for either statistical or
nonstatistical sampling, but they must be performed differently for each. This statement is incorrect because the audit
procedures must be performed differently for each type of sampling.
Option C is incorrect as both statistical and nonstatistical sampling require judgmental audit procedures.

20. C. Item in the accounting population should have an opportunity to be selected.

Option A is incorrect as random sampling does not require each stratum of the accounting population to be given
equal representation in the sample.
Option B is incorrect as random sampling does not require each item in the accounting population to be randomly
ordered.
Option D is incorrect as random sampling does not require each item to be systematically selected using replacement.