1. When using a statistical sampling plan, the auditors would probably require a smaller sample if the:

Population increases. Tolerable misstatement decreases. Desired risk of incorrect acceptance increases. Expected deviation rate increases.

2. Which of the following types of risk is of critical importance to auditors in performing tests of controls?

The risk of assessing control risk too low. The risk of assessing control risk too high. The risk of incorrect acceptance. The risk of incorrect rejection.

3. An advantage of using statistical sampling techniques is that such techniques:

Mathematically measure risk. Eliminate the need for judgmental decisions. Define the values of the allowance for sampling risk and tolerable misstatement required to provide audit satisfaction. Have been established in the courts to be superior to judgmental sampling.

4. Which of the following is generally not true about statistical sampling as compared to nonstatistical sampling?

Statistical samples are more representative of the population. Statistical sample plans involve additional costs of evaluation. Statistical sampling allows a more objective evaluation of sample results. Statistical sampling may assist the auditors in designing more efficient samples.

5. The auditor using nonstatistical attributes sampling, but who nevertheless has chosen the sample in conformity with random selection procedures:

Need not consider the risk of assessing control risk too low. Has committed a nonsampling error. Will have to use discovery sampling techniques to evaluate the results. Should compare the deviation rate of the sample to the tolerable rate.

6. In performing a test of a control last year the auditors specified a tolerable deviation rate of X percent. This year the auditors have specified a tolerable rate of less than X percent. Assuming that all other factors remain the same, which of the following is true regarding the relationship between this year's sample size compared to last year's sample size?

This year's sample is larger than last year's sample. This year's sample is smaller than last year's sample. This year's sample is equal to last year's sample. This year's sample is indeterminate in relation to last year's sample.

7. The auditors expect a population deviation rate of billing errors of eight percent, and have established a tolerable rate of five percent. The sampling approach most likely to be used is:

Attributes sampling. Stratified random sampling. Variables sampling. None, as sampling does not seem appropriate in this situation.

8. In testing accounts receivable, an auditor sends out positive confirmation requests to 100 randomly selected customers. A customer returns the confirmation indicating that the balance is correct when, in fact, the balance is overstated. This is an example of:

Projected misstatement. Sampling error. Standard error. Nonsampling error.