ACT 5743 Quiz 2 Statistical Sampling | Complete Solution

ACT 5743 Quiz 2 Statistical Sampling

An advantage of using statistical over non-statistical sampling methods in tests of controls is that the statistical methods 

A. Afford greater assurance than a nonstatistical sample of equal size
B. Provide an objective basis for quantitatively evaluating sample risks
C. Can more easily convert the sample into a dual-purpose test useful for substantive testing
D. Eliminate the need to use judgment in determining appropriate sample sizes

If the expected deviation rate exceeds the tolerable deviation rate, the auditor is most likely to
A. Have a large sample size
B. Set control risk at the maximum without sampling
C. Set control risk at the minimum without sampling
D. Pick a lower risk of assessing control risk too low to increase sample size

In which of the following cases would the auditor be most likely to conclude that all of the items in an account under consideration should be examined rather than tested on a sample basis?
A. Tolerable deviation is large and expected deviation is low
B. Tolerable deviation is small and expected deviation is high
C. Tolerable deviation is large and expected deviation is high
D. Tolerable deviation is small and expected deviation is low

If auditors conducting attributes sampling found that the client deviated from a prescribed control in nine of the first 10 items examined, the auditor is most likely to
A. Increase sample size
B. Increase the computed upper deviation rate
C. Decrease the tolerable deviation rate
D. Stop the test and increase control risk

The computed upper deviation rate is
A. The maximum rate of deviations that the auditor is willing to accept before deciding not to rely on the control
B. The rate of deviations that the auditor expects to occur in the population
C. A point estimate of the population deviation rate
D. The sum of the sample deviation rate and an appropriate allowance for sampling risk.