D251 WGU MOCK EXAM QUESTIONS AND
CORRECT ANSWERS!!
Which statement reflects a 5% risk of overreliance?
95% confidence level that the actual rate of deviation will not exceed the tolerable deviation
What is the objective of sampling when testing controls?
To determine whether controls are operating effectively
What is the primary objective of monetary unit sampling?
To identify overstatement errors
How can an auditor increase the chances that systematically selected samples are
representative of the population?
By using multiple random starts
Which sampling method allows an auditor to measure the risk of making an incorrect
inference about the population from which the sample is taken?
Statistical
What is audit sampling?
Taking part of a population- subjecting it to audit procedures- projecting results to a population
How to gather evidence for existence or occurrence assertion?
Take a sample of recorded transactions to examine underlying evidence or send out
confirmations
How to gather evidence for completeness assertion?
Take a sample of subsequent cash disbursements to search for under-recorded liabilities
How to gather evidence for rights or obligations assertion?
Performed in conjunction with existence testing, including examining source documents
,How to gather evidence for valuation or allocation assertion?
Select items and trace back to source documents, such as purchase agreements or invoices
How to gather evidence for presentation and disclosure assertion?
Select items and verify estimates for proper disclosure
Do inquiries, observations and analytical procedures involve sampling?
No
What is Attributes Sampling?
Sampling for testing the effectiveness of controls
What is Monetary Unit Sampling?
A sampling method based on attribute estimation sampling but involving dollar misstatements
rather than failure rates
What is nonsampling risk?
The risk that the auditor reaches an erroneous conclusion for any reason not related to sampling
risk.
What is Sampling Risk?
When the sample does not contain characteristics representative of the sample such that
inferences made about that sample are incorrect
What is the risk of overreliance also known as?
Risk of incorrect acceptance of internal control reliability or risk of assessing control risk too low
What is risk of under reliance also know as?
The risk of incorrect rejection of internal control reliability or risk of assessing control risk too
high
What is the risk of incorrect acceptance of book value?
, Risk that the auditor will conclude that the account balance does not contain a material
misstatement when the account balance actually does contain a material misstatement.
What is the risk of incorrect rejection of book value?
Risk that the auditor will conclude that the account balance contains a material misstatement
when the account balance actually does not contain a material misstatement.
What are the 4 questions an auditor needs to ask when Sampling?
1. Which population, sampling units and characteristics (Population)?
2. How many items (Sample Size)?
3. Which items should be included in the sample (Sample selection)?
4. What inferences can be made (Sample evaluation)?
What is a Sampling Unit?
Individual units of a population
What is Statistical Sampling?
Choosing part of a population of interest for inspection.
Is statistical sampling Quantitative or Qualitative?
Quantitative
What is Nonstatistical Sampling?
The selection of sample items based on the author's judgement
What are the 7 steps in Attribute Sampling?
1. Define the attributes and what constitutes failure
2. Define the population from which the auditor takes the sample
3. Determine the sample size
4. Determine the method of selecting the sample
5. Select the sample items and perform the test of control
6. Evaluate the results and their effect on the substantive procedures and internal controls
7. Document all phases of the sampling process
CORRECT ANSWERS!!
Which statement reflects a 5% risk of overreliance?
95% confidence level that the actual rate of deviation will not exceed the tolerable deviation
What is the objective of sampling when testing controls?
To determine whether controls are operating effectively
What is the primary objective of monetary unit sampling?
To identify overstatement errors
How can an auditor increase the chances that systematically selected samples are
representative of the population?
By using multiple random starts
Which sampling method allows an auditor to measure the risk of making an incorrect
inference about the population from which the sample is taken?
Statistical
What is audit sampling?
Taking part of a population- subjecting it to audit procedures- projecting results to a population
How to gather evidence for existence or occurrence assertion?
Take a sample of recorded transactions to examine underlying evidence or send out
confirmations
How to gather evidence for completeness assertion?
Take a sample of subsequent cash disbursements to search for under-recorded liabilities
How to gather evidence for rights or obligations assertion?
Performed in conjunction with existence testing, including examining source documents
,How to gather evidence for valuation or allocation assertion?
Select items and trace back to source documents, such as purchase agreements or invoices
How to gather evidence for presentation and disclosure assertion?
Select items and verify estimates for proper disclosure
Do inquiries, observations and analytical procedures involve sampling?
No
What is Attributes Sampling?
Sampling for testing the effectiveness of controls
What is Monetary Unit Sampling?
A sampling method based on attribute estimation sampling but involving dollar misstatements
rather than failure rates
What is nonsampling risk?
The risk that the auditor reaches an erroneous conclusion for any reason not related to sampling
risk.
What is Sampling Risk?
When the sample does not contain characteristics representative of the sample such that
inferences made about that sample are incorrect
What is the risk of overreliance also known as?
Risk of incorrect acceptance of internal control reliability or risk of assessing control risk too low
What is risk of under reliance also know as?
The risk of incorrect rejection of internal control reliability or risk of assessing control risk too
high
What is the risk of incorrect acceptance of book value?
, Risk that the auditor will conclude that the account balance does not contain a material
misstatement when the account balance actually does contain a material misstatement.
What is the risk of incorrect rejection of book value?
Risk that the auditor will conclude that the account balance contains a material misstatement
when the account balance actually does not contain a material misstatement.
What are the 4 questions an auditor needs to ask when Sampling?
1. Which population, sampling units and characteristics (Population)?
2. How many items (Sample Size)?
3. Which items should be included in the sample (Sample selection)?
4. What inferences can be made (Sample evaluation)?
What is a Sampling Unit?
Individual units of a population
What is Statistical Sampling?
Choosing part of a population of interest for inspection.
Is statistical sampling Quantitative or Qualitative?
Quantitative
What is Nonstatistical Sampling?
The selection of sample items based on the author's judgement
What are the 7 steps in Attribute Sampling?
1. Define the attributes and what constitutes failure
2. Define the population from which the auditor takes the sample
3. Determine the sample size
4. Determine the method of selecting the sample
5. Select the sample items and perform the test of control
6. Evaluate the results and their effect on the substantive procedures and internal controls
7. Document all phases of the sampling process
