Advanced Auditing Final Exam 2011 student copy (1)

Advanced Auditing Final Exam 2011 student copy (1) - BA 655...

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BA 655 Advanced Auditing Fall 2011 Session I Final Exam Name:_________________________________ I: MC Answer Sheet 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 I Multiple Choice 1. 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
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2. For an attributes sampling plan, the tolerable deviation rate is 4%, the computed upper deviation rate is 7%, the sample deviation rate is 3% and the desired confidence level is 95%. What is the allowance for sampling risk included in the computed upper deviation rate? A. 2% B. 3% C. 4% D. 5% 3. Which of the following statements is correct concerning statistical sampling in tests of controls? A. As the population size increases, the sample size should increase proportionately B. Deviations from specific internal control procedures at a given rate ordinarily result in misstatements at a lower rate C. There is an inverse relationship between the expected population deviation rate and the sample size D. In determining tolerable deviation rate, an auditor considers detection risk and the sample size 4. In a monetary-unit sample with a sampling interval of $10,000, an auditor discovered that a selected account receivable with a recorded amount of $5,000 had an audit amount of $2,000. The projected misstatement of this sample was A. $3,000 B. $4,000 C. $6,000 D. $8,000 5. An auditor established a $60,000 tolerable misstatement for an asset with an account balance of $1,000,000. The auditor selected a sample of every twentieth item from the population of 1,000 items that represented the asset account balance and discovered overstatements of $3,700 and understatements of $200. Under these circumstances, the auditor most likely would conclude that A. There is an unacceptably high risk that the actual misstatements in the population exceed the tolerable misstatement because the total projected misstatement is more than the tolerable misstatement B. There is an unacceptably high risk that the tolerable misstatement exceeds the sum of actual overstatements and understatements C. The asset account is fairly stated because the total projected misstatement is less than the tolerable misstatement D. The asset account is fairly stated because the tolerable misstatement exceeds the net of projected actual overstatements and understatements
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6. Auditors often request that the audit client send a letter of inquiry to those attorneys who have been consulted with respect to litigation, claims, or assessments. The primary reason for this request is to provide the auditor with A. An estimate of the dollar amount of the probable loss B. An expert opinion as to whether a loss is possible, probable, or remote
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Advanced Auditing Final Exam 2011 student copy (1) - BA 655...

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