Question

For each term in the first column below, identify its definition (or partial definition). Each definition may be used once or not at all.
Term
a. Allowance for sampling risk
b. Deviation rate
c. Discovery sampling
d. Projected misstatement
e. Reliability
f. Risk of assessing control risk too low
g. Risk of incorrect acceptance
h. Sampling risk
i. Tolerable deviation rate

Definition (or Partial Definition)
1. A classical variables sampling plan enabling the auditors to estimate the average dollar value (or other variable) of items in a population by determining the average value of items in a sample.
2. A defined rate of departure from prescribed controls. Also referred to as occurrence rate or exception rate.
3. A sampling plan enabling the auditors to estimate the rate of deviation (occurrence) in a population.
4. A sampling plan for locating at least 1 deviation, providing that the deviation occurs in the population with a specified frequency.
5. A sampling plan in which the sample is selected in stages, with the need for each subsequent stage being conditional on the results of the previous stage.
6. Also referred to as precision, an interval around the sample results in which the true population characteristic is expected to lie.
7. An estimate of the most likely amount of monetary misstatement in a population.
8. The complement of the risk of incorrect acceptance.
9. The maximum population rate of deviations from a prescribed control that the auditors will accept without modifying the planned assessment of control risk.
10. The possibility that the assessed level of control risk based on the sample is less than the true operating effectiveness of the controls.
11. The possibility that the assessed level of control risk based on the sample is greater than the true operating effectiveness of the control.
12. The risk that sample results will indicate that a population is materially misstated when, in fact, it is not.
13. The risk that sample results will indicate that a population is not materially misstated when, in fact, it is materially misstated.
14. The risk that the auditors’ conclusion based on a sample might be different from the conclusion they would reach if the test were applied to the entire population.



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  • CreatedOctober 25, 2014
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