AUDIT SAMPLING

1. ___________, Audit Evidence states that when designing the test of

controls and test of details, the auditor shall determine means of
selecting items for testing that are effective in meeting the purpose
of the audit procedure.
a. PSA 500 c. PSA 700
b. PSA 315 d. IFRS 15

2. The means of selecting items for testing which are available to the
auditor are:
I. Selecting all items (100% examination) / (Full Substantive)
II. Selecting Specific Items
III. Audit Sampling

a. I only c. II only
b. III only d. I, II and III

3. The decision as to which approach to use will depend on the

circumstances, it may be any one or combination of the means of
selecting items so the auditor needs to be satisfied that methods
used are __________ in providing ____________________ to meet the
objectives of the audit procedure.

4. The auditor may decide that it will be most appropriate to examine

the entire population (full substantive testing). As to the use of
this method, which of the following is/are correct?
I. 100% examination is unlikely in the case of Test of Controls.
II. 100% examination is more common for Test of Details.

a. I only c. Both statements are false

b. II only d. Both statements are correct

5. When is 100% substantive testing is appropriate in the circumstances?

I. When the population constitutes a small number of large value
items.
II. When there is a significant risk and other means do not provide
sufficient appropriate audit evidence.
III. When the repetitive nature of a calculation or other process
performed automatically by an information system makes 100%
examination cost effective.

a. II and III only c. III only

b. III and IV only d. I, II and III

6. __________ involves the application of audit procedures to less than

100% of items within a class of transactions or account balance such
that all sampling units have a chance of selection in order to provide
the auditor with a reasonable basis on which to draw conclusions about
the entire population.
a. Audit Sampling c. 100% substantive testing
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 b. Selecting Specific Items d. Audit Programs

7. Audit Sampling can use:

I. Statistical Approach
II. Non-statistical Approach

a. I only c. Neither I nor II

b. II only d. Both I and II

8. ___________ means either control deviations, when performing test of

controls, or misstatements, when performing test of details.

9. ___________ is the difference between what was expected, based on the

documentation of controls, and what actually occurred and are usually
stated in terms of percentages.

10. ___________ is the difference between the amount computed by the

auditor and the amount actually recorded or reflected in the
accounting records and are usually presented in terms of monetary
amount.

11. ___________ an error that arises from an isolated event that has not
recurred other than on specifically identifiable occasions and is
therefore not representative of errors in the population.

12. ___________ is the entire set of data from which a sample is selected
and abut which the auditor wishes to draw conclusions.

13. ___________ is the individual items constituting a population.

14. Which of the following statement(s) is/are true regarding to the

concept of audit sampling in relation to Audit Procedures?
I. Risk Assessment Procedures do not involve the use of audit
sampling.
II. Test of Controls are performed when the auditor’s risk
assessment includes a low expectation of the operating
effectiveness of controls in which audit sampling for TOC is
generally appropriate when application of controls leaves
audit evidence of performance.
III. Substantive testing is concerned with amounts and are of two
types: (1) test of details of classes of transactions, account
balances and disclosures, and (2) substantive analytical
procedures. In the context of substantive testing, audit
sampling and other means of selecting items for testing,
relates only to test of details.

a. I only c. II and III only

b. I and III only d. I, II and III

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15. ____________ is the likelihood that an auditor may unknowingly fail
to modify his or her opinion on materially misstated financial
statements.

16. ___________ is the risk that material errors will occur in the process
by which financial statements are developed.

17. Risk of material misstatement is a combination of __________ and

___________.

18. ___________ represents the susceptibility of an account balance to

errors that, when combined with errors in other accounts, could be
material and that are not monitored by related control procedures and
is not directly controllable by the auditor.

19. ___________ represents the likelihood that errors could occur, and
could be material when combined with errors in other accounts, but
not will be prevented or detected by the entity’s internal control
structure.

20. ___________ is the risk that any material errors that occur will not
be detected by the auditor.

21. ___________ results from the fact that a particular audit sample may
not be representative of the population tested and these are
uncertainties related to sampling.

22. ___________ are uncertainties arising from factors unrelated to

sampling and includes all aspects of audit risk not due to sampling.

23. The risk that material errors may occur and remain undetected is
influenced by:
I. Sampling Risk
II. Non-sampling Risk

a. I only c. Both I and II

b. II only d. Neither I nor II

24. What is/are the aspect(s) of sampling risk in Test of Controls?

I. Risk of assessing control risk too high (Risk of Under-
reliance)
II. Risk of assessing control risk too low (Risk of Over-reliance)

a. I only c. Both I and II

b. II only d. Neither I nor II

25. ____________________ is the risk that a sample deviation rate supports

assessing control risk at the maximum, when unknown to the auditor,
the true deviation rate in the population supports assessing control
risk below the maximum.

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26. Which of the following statement(s) is/are true about Risk of
assessing control risk too high (risk of under reliance)?
I. This results in over-auditing (doing more substantive tests
than necessary).
II. Assessing control risk too high results in ineffectiveness.

a. I only c. Both I and II

b. II only d. Neither I nor II

27. ____________________ the true his is the risk that a sample does
support assessing control risk below the maximum when, unknown to the
auditor, the true deviation rate in the population supports assessing
control risk at the maximum.

28. Which of the following statement(s) is/are true about Risk of

assessing control risk too low (risk of over reliance)?
I. This results in under auditing (doing less substantive tests
than necessary).
II. Assessing control risk too low affects the efficiency of the
audit.

a. I only c. Both I and II

b. II only d. Neither I nor II

29. What is/are the aspect(s) of sampling risk in Substantive Tests?

I. Risk of Incorrect Rejection
II. Risk of Incorrect Acceptance

a. I only c. Both I and II

b. II only d. Neither I nor II

30. ______________ is the risk that a sample supports the conclusion that
a recorded account balance is materially misstated when, unknown to
the auditor, the account is not materially misstated.

31. Risk of Incorrect Rejection relates to __________ of an audit?

a. efficiency c. efficiency and effectiveness
b. effectiveness d. neither efficiency nor effectiveness

32. ______________ is the risk that a sample supports the conclusion that
a recorded account balance is not materially misstated when, unknown
to the auditor, the account is materially misstated.

33. Risk of Incorrect Acceptance relates to __________ of an audit?

a. efficiency c. efficiency and effectiveness
b. effectiveness d. neither efficiency nor effectiveness

34. What is/are the general approach(es) to audit sampling?

I. Statistical Sampling
II. Non-statistical Sampling

a. I only c. Both I and II

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 b. II only d. Neither I nor II

35. _______________ apply the laws of probability to aid an auditor in

designing an efficient sample, in measuring the sufficiency of
evidence obtained, and in evaluating the sample results.

36. _______________ rely exclusively on subjective judgment to determine

the sample size and evaluate the results.

37. Which of the following statement(s) is/are correct regarding the

difference between statistical and non-statistical sampling?
a. Statistical sampling plans measure the risk that a sample is not a
representative of a population.
b. Statistical provides a mathematical measurement of the degree of
uncertainty.
c. Non-statistical sampling does not provide a and b.
d. All of the above statements are correct.

38. Which is more preferable to apply? Statistical or non-statistical

sampling?
a. Statistical sampling as it provides measurements of the degree of
risk and uncertainty.
b. Non-statistical sampling as it is more easy apply than statistical
sampling.
c. Statistical sampling or Non-statistical sampling, depending upon
the professional judgement of the auditor because under the
standards, both are acceptable, as long as the objectives of the
auditor are met.
d. None of the above statements is true.

39. This method utilizes random-number tables or computer-generated

random numbers to select sampling units from a population. This is
appropriate both for statistical and non-statistical sampling plans.
a. Random-Number Sampling
b. Systematic Sampling
c. Block Selection (Cluster Sampling)
d. Haphazard Sampling

40. This involves selecting every nth from a population of sequentially

ordered items. It can be useful for statistical sampling.
a. Random-Number Sampling
b. Systematic Sampling
c. Block Selection (Cluster Sampling)
d. Haphazard Sampling

41. This method involves selecting a group of items arranged contiguously

within a larger grouping of sampling units and is the least desirable
sample selection method. An auditor should not use this method for
either statistical or non-statistical sampling, unless he or she
exercises considerable care in controlling sampling risk.
a. Random-Number Sampling
b. Systematic Sampling
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 c. Block Selection (Cluster Sampling)
d. Haphazard Sampling

42. This consists of sampling units selected without special reasons, but
also without conscious bias. Although this method may be useful for
non-statistical sampling, this is not appropriate for statistical
sampling.
a. Random-Number Sampling
b. Systematic Sampling
c. Block Selection (Cluster Sampling)
d. Haphazard Sampling

43. Which of the following statement(s) is/are true about stratification?

I. The objective of the stratification is to increase the
variability of items within each stratum and therefore allow
sample size to be reduced without a proportional increase in
sampling risk.
II. The results of audit procedures applied to a sample of items
within a stratum can only be projected to the items that make
up that stratum.

a. I only c. Both I and II

b. II only d. Neither I nor II

44. FACTORS AFFECTING THE SAMPLE SIZE OF TEST OF CONTROLS

Effect on
Sample Size
An increase in the auditor’s intended reliance on
accounting and internal control systems
Increase in the rate of deviation from the tolerable
misstatements acceptable
An increase in the rate of deviation from expected
deviation rate.
A decrease in the risk of assessing control risk too
low.
Increase in sampling units

45. _______________ is used when the auditor expects a very few deviations
within the population being tested. Under this method, the auditor
has no fixed sample size. After testing a sample, the auditor makes
a decision whether to stop testing or to continue with the sampling
plan.
a. Sequential Sampling
b. Stop-or-go Sampling
c. Either A or B
d. Discovery Sampling

46. _____________ is most appropriate when no deviations are expected

within the population. Thus, a single deviation is a cause of concern.
This is normally used when the auditor suspects of fraud.
a. Sequential Sampling
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 b. Stop-or-go Sampling
c. Either A or B
d. Discovery Sampling

47. Factors Affecting Sample Size for Substantive Testing

Effect on
Sample Size
An increase in the auditor’s assessment of inherent
risks
Increase in the auditor’s assessment of control risk
(decrease in reliance on internal control)
An increase in the auditor’s required confidence
level
An increase in tolerable misstatement
An increase in the expected error
Stratification of the population when appropriate
Increase in sampling units

48. Under Probability-Proportional-to-size (PPS) sampling, which

statement(s) is/are true?
I. PPS is sampling technique that uses attribute a sampling theory
to evaluate the results when a large number transactions are
captured within a single account.
II. In PPS, the auditor randomly selects individual pesos from a
population and then audits the balances, transactions or
documents-called logical units – that include pesos selected.
III. PPS is appropriate when no errors are expected and testing for
understatement.

a. I and III only c. I and II only

b. II and III only d. I, II and III

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