Introduction To Robust Estimation And Hypothesis Testing 3rd Edition Rand R. Wilcox - Solutions

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On the basis of the audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor woulda. Decrease substantive
Inherent risk and control risk differ from detection risk in that theya. Arise from the misapplication of auditing procedures.b. May be assessed in either quantitative or nonquantitative terms.c. Exist independently of the financial statement audit.d. Can be changed at the auditor’s discretion.
Which of the following audit risk components may be assessed in nonquantitative terms?Control risk Detection risk Inherent riska. Yes Yes Nob. Yes No Yesc. Yes Yes Yesd. No Yes Yes
As the acceptable level of detection risk decreases, the assurance directly provided froma. Substantive tests should increase.b. Substantive tests should decrease.c. Tests of controls should increase.d. Tests of controls should decrease.
The risk that an auditor will conclude, based on substantive tests, that a material misstatement does not exist in an account balance when, in fact, such misstatement does exist is referred to asa. Sampling risk.b. Detection risk.c. Nonsampling risk.d. Inherent risk.
As the acceptable level of detection risk decreases, an auditor maya. Reduce substantive testing by relying on the assessments of inherent risk and control risk.b. Postpone the planned timing of substantive tests from interim dates to the year-end.c. Eliminate the assessed level of inherent risk
Which of the following is not a financial statement assertion relating to account balances?a. Completeness.b. Existence.c. Rights and obligations.d. Valuation and competence.
Financial statement assertions are established for account balances, Classes of transactions Disclosuresa. Yes Yesb. Yes Noc. No Yesd. No No
After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up working paper review.This second review usually focuses ona. The fair presentation of the financial statements in conformity with GAAP.b. Fraud involving the
The third general standard states that due care is to be exercised in the performance of an audit. This standard is ordinarily interpreted to requirea. Thorough review of the existing safeguards over access to assets and records.b. Limited review of the indications of employee fraud and illegal
Which of the following is most likely to be unique to the audit work of CPAs as compared to work performed by practitioners of other professions?a. Due professional care.b. Competence.c. Independence.d. Complex body of knowledge.
Which of the following is not an attestation standard?a. Sufficient evidence shall be obtained to provide a reasonable basis for the conclusion that is expressed in the report.b. The report shall identify the subject matter on the assertion being reported on and state the character of the
Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?a. The attestation standards do not apply to audits of historical financial statements, while the generally accepted auditing standards do.b. The requirement that the
The requirement for independence by the auditor regarding audits of employee benefit plans apply to the plan as well asa. Investment companies doing business with the plan.b. Members of the plan.c. The plan sponsor.d. The actuary firm doing services for the plan.
Which of the following bodies enforce the audit requirements of the Employee Retirement Security Act of 1974 (ERISA) with respect to employee benefit plans?a. The Department of Labor.b. The Department of Pension Management.c. The Securities and Exchange Commission.d. The Public Company Accounting
Under the independence standards of the GAO for performing audits in accordance with generally accepted government auditing standards, which of the following are overreaching principles for determining whether a nonaudit service impairs independence?I. Auditors must not perform nonaudit services
In accordance with the independence standards of the GAO for performing audits in accordance with generally accepted government auditing standards, which of the following is not an example of an external impairment of independence?a. Reducing the extent of audit work due to pressure from management
Independence standards of the GAO for audits in accordance with generally accepted government auditing standards describe three types of impairments of independence.Which of the following is not one of these types of impairments?a. Personal.b. Organizational.c. External.d. Unusual.
Which of the following is not true about international auditing standards?a. Audit report modification for consistency in the application of accounting principles is required.b. Confirmation of accounts receivable is not required.c. The location in which the auditor practices must be disclosed in
Which of the following is not true about international auditing standards?a. International auditing standards do not require an audit of internal control.b. International auditing standards do not allow reference to division of responsibilities in the audit report.c. International auditing
What body establishes international auditing standards?a. The Public Company Accounting Oversight Board.b. The International Federation of Accountants.c. The World Bank.d. The International Assurance Body.
With regard to marketing professional services, the IFAC Code of Ethics for Professional Accountants indicates thata. Direct marketing is prohibited.b. Marketing is allowed if lawful.c. Marketing should be honest and truthful.d. Marketing of audit services is prohibited.
With respect to the acceptance of contingent fees for professional services, the IFAC Code of Ethics for Professional Accountants indicates that the accounting firma. Should not accept contingent fees.b. Should establish appropriate safeguards around acceptance of a contingent fee.c. Should accept
If an audit firm discovers threats to independence with respect to an audit engagement, the IFAC Code of Ethics for Professional Accountants indicates that the firm shoulda. Immediately resign from the engagement.b. Notify the appropriate regulatory body.c. Document the issue.d. Evaluate the
Based on the IFAC Code of Ethics for Professional Accountants, threats to independence arise from all of the following except:a. Self interest.b. Advocacy.c. The audit relationship.d. Intimidation.
In relation to the AICPA Code of Professional Conduct, the IFAC Code of Ethics for Professional Accountantsa. Has more outright prohibitions.b. Has fewer outright prohibitions.c. Has no outright prohibitions.d. Applies only to professional accountants in business.
Which of the following services is a CPA generally required to perform when conducting a personal financial planning engagement?a. Assisting the client to identify tasks that are essential in order to act on planning decisions.b. Assisting the client to take action on planning decisions.c.
Under the Statements on Standards for Consulting Services, which of the following statements best reflects a CPA’s responsibility when undertaking a consulting services engagement? The CPA musta. Not seek to modify any agreement made with the client.b. Not perform any attest services for the
Which of the following services may a CPA perform in carrying out a consulting service for a client?I. Analysis of the client’s accounting system.II. Review of the client’s prepared business plan.III. Preparation of information for obtaining financing.a. I and II only.b. I and III only.c. II
According to the standards of the profession, which of the following events would require a CPA performing a consulting services engagement for a nonaudit client to withdraw from the engagement?I. The CPA has a conflict of interest that is disclosed to the client and the client consents to the CPA
According to the profession’s standards, which of the following would be considered consulting services?Advisory services Implementation services Product servicesa. Yes Yes Yesb. Yes Yes Noc. Yes No Yesd. No Yes Yes
Which of the following is an authoritative body designated to promulgate attestation standards?a. Auditing Standards Board.b. Governmental Accounting Standards Board.c. Financial Accounting Standards Board.d. General Accounting Office.
Which of the following statements is correct regarding an accountant’s working papers?a. The accountant owns the working papers and generally may disclose them as the accountant sees fit.b. The client owns the working papers but the accountant has custody of them until the accountant’s bill is
Which of the following statements is(are) correct regarding a CPA employee of a CPA firm taking copies of information contained in client files when the CPA leaves the firm?I. A CPA leaving a firm may take copies of information contained in client files to assist another firm in serving that
On June 1, 2008, a CPA obtained a $100,000 personal loan from a financial institution client for whom the CPA provided compilation services. The loan was fully secured and considered material to the CPA’s net worth. The CPA paid the loan in full on December 31, 2009. On April 3, 2009, the client
Kar, CPA, is a staff auditor participating in the audit engagement of Fort, Inc. Which of the following circumstances impairs Kar’s independence?a. During the period of the professional engagement, Fort gives Kar tickets to a football game worth$75.b. Kar owns stock in a corporation that Fort’s
To exercise due professional care an auditor shoulda. Critically review the judgment exercised by those assisting in the audit.b. Examine all available corroborating evidence supporting managements assertions.c. Design the audit to detect all instances of illegal acts.d. Attain the proper balance
According to the ethical standards of the profession, which of the following acts is generally prohibited?a. Purchasing a product from a third party and reselling it to a client.b. Writing a financial management newsletter promoted and sold by a publishing company.c. Accepting a commission for
Larry Sampson is a CPA and is serving as an expert witness in a trial concerning a corporation’s financial statements.Which of the following is(are) true?I. Sampson’s status as an expert witness is based upon his specialized knowledge, experience, and training.II. Sampson is required by AICPA
According to the standards of the profession, which of the following activities may be required in exercising due care?Consulting with experts Obtaining specialty accreditationa. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following reports may be issued only by an accountant who is independent of a client?a. Standard report on an examination of a financial forecast.b. Report on consulting services.c. Compilation report on historical financial statements.d. Compilation report on a financial projection.
According to the standards of the profession, which of the following activities would most likely not impair a CPA’s independence?a. Providing advisory services for a client.b. Contracting with a client to supervise the client’s office personnel.c. Signing a client’s checks in emergency
Stephanie Seals is a CPA who is working as a controller for Brentwood Corporation. She is not in public practice.Which statement is true?a. She may use the CPA designation on her business cards if she also puts her employment title on them.b. She may use the CPA designation on her business cards as
May a CPA hire for the CPA’s public accounting firm a non-CPA systems analyst who specializes in developing computer systems?a. Yes, provided the CPA is qualified to perform each of the specialist’s tasks.b. Yes, provided the CPA is able to supervise the specialist and evaluate the
According to the profession’s ethical standards, which of the following events may justify a departure from a Statement of the Governmental Accounting Standards Board?New legislation Evolution of a new form of business transactiona. No Yesb. Yes Noc. Yes Yesd. No No
According to the ethical standards of the profession, which of the following acts is generally prohibited?a. Issuing a modified report explaining a failure to follow a governmental regulatory agency’s standards when conducting an attest service for a client.b. Revealing confidential client
The profession’s ethical standards most likely would be considered to have been violated when a CPA represents that specific consulting services will be performed for a stated fee and it is apparent at the time of the representation that thea. Actual fee would be substantially higher.b. Actual
According to the standards of the profession, which of the following circumstances will prevent a CPA performing audit engagements from being independent?a. Obtaining a collateralized automobile loan from a financial institution client.b. Litigation with a client relating to billing for consulting
Which of the following is a “self review” threat to member independence?a. An engagement team member has a spouse that serves as CFO of the attest client.b. A second partner review is required on all attest engagements.c. An engagement team member prepares invoices for the attest client.d. An
Which of the following is an example of a safeguard implemented by the client that might mitigate a threat to independence?a. Required continuing education for all attest engagement team members.b. An effective corporate governance structure.c. Required second partner review of an attest
For which of the following can a member of the AICPA receive an automatic expulsion from the AICPA?I. Member is convicted of a felony.II. Member files his own fraudulent tax return.III. Member files fraudulent tax return for a client knowing that it is fraudulent.a. I only.b. I and II only.c. I and
Which of the following best describes what is meant by the term generally accepted auditing standards?a. Rules acknowledged by the accounting profession because of their universal application.b. Pronouncements issued by the Auditing Standards Board.c. Measures of the quality of the auditor’s
Generate data from a bivariate normal distribution with the R command x=rmul(200).Then enter the R command y=x[,1]+x[,2]+x[,1]*x[,2]+rnorm(200) and examine the plot returned by the R command gamplot(x,y,scale=T). Compare this to the plot returned by R command gamplotINT(x,y,scale=T).
Generate 25 pairs of observations from a bivariate normal distribution having correlation zero and store them in x. (The R function rmul, written for this book, can be used.)Generate 25 more observations and store them in y. Create a smooth using rplot using scale=T and compare it to the smooth
Generate 25 observations from a standard normal distribution and store the results in the R variable x. Generate 25 more observations and store them in y. Use rungen to plot a smooth based on the Harrell–Davis estimator of the median. Also create a smooth with the argument scat=F. Comment on how
For the experimental group of the Pygmalion data in Section 11.2.1, create a plot of the smooth using f = 1 and the function rplot. Recreate the plot, but this time omit the scatterplot of the points by setting the argument scat to F for false. What does this illustrate?
For the reading data in the upper right panel of Figure 11.5, recreate the smooth. If you wanted to find a parametric regression equation, what might be tried? Examine how well your suggestions perform.
Using the Pygmalion data, compare the slope of the regression line of the experimental group to the control group using the biweight midregression estimator.
The data in the lower left panel of Figure 11.5 are stored in the file agegesell.dat.Remove the two pairs of points having the largest x value and create a running interval smoother using the data that remain.
For the reading data in the file read.dat, use the R function rplot to investigate the shape of the regression surface when predicting the 20% trimmed mean of WWISST2 (the data in column 8) with RAN1T1 and RAN2T1 (the data in columns 4 and 5).
For the reading data in file read.dat, let x be the data in column 2 (TAAST1), and suppose it is desired to predict y, the data in column 8 (WWISST2). Speculate on whether there are situations where it would be beneficial to use x 2to predict y taking into account the value stored in column 3
Use the function ancova and the Pygmalion data to compare the control group to the experimental group using means. What might be affecting power?
Based on the results of Exercise 6, speculate about what a nonrobust smoother might look like. Check your answer with the smoother lowess using the R lplot.
Use rplot to plot a smooth of the Pygmalion data using f = 0.75 and 20% trimmed means. Create a plot for both the control and experimental groups when the goal is to predict post IQ scores with pretest scores. Comment on how the results compare to using f = 1.
For the Pygmalion data in Section 11.2.1, use the function reglev to determine which points, if any, are regression outliers. (The data for the control group are stored in pygc.dat, and the data for the experimental group are stored in pyge.dat.)
Use the function winreg to estimate the slope and intercept of the star data using 20%Winsorization. (The data are stored in the file star.dat. See Section 1.8 on how to obtain the data.)
Test H0 : β1 = β2 = 0 using the R function regtest and βˆm. 3. For the data in Exercise 1, test H0 : β1 = 0 with the functions regci and regtest.Comment on the results.
Section 8.6.2 reports data on the effects of consuming alcohol on three different occasions. Using the data for group 1, suppose it is desired to predict the response at time 1 using the responses at times 2 and
For the data in Exercise 1 of Chapter 10, the 0.95 confidence interval for the slope, based on the least squares regression line, is (0.0022, 0.0062). Using R, the 0.95 confidence interval for the slope returned by lsfitci is (0.003, 0.006). The 0.95 confidence interval returned by the R function
For the star data in Figure 6.3, which are stored in the file star.dat, eliminate the four outliers in the upper left corner of the plot by restricting the range of the x values. Then using the remaining data, estimate the standard error of the least squares estimator, the M-estimator with Schweppe
Describe the relative merits of the OP and MGV estimators in Section 10.10.
Graphically illustrate the difference between a regression outlier and a good leverage point. That is, plot some points for which y = β1x +β0, and then add some points that represent regression outliers and good leverage points.
For the data in Exercise 13, identify any leverage points using the hat matrix. Next, identify leverage points with the function reglev. How do the results compare?
For the data used in Exercise 11, RAN1T1 and RAN2T1 (stored in columns 4 and 5) are measures of digit naming speed and letter naming speed. Use M regression with Schweppe weights to estimate the regression parameters when predicting WWISST2.Use the function elimna, described in Chapter 1, to remove
For the data used in Exercise 11, compute the hat matrix and identify any leverage points. Also check for leverage points with the R function reglev. How do the results compare?
The file read.dat contains reading data collected by L. Doi. Of interest is predicting WWISST2, a word identification score (stored in column 8), using TAAST1, a measure of phonological awareness stored in column 2, and SBT1 (stored in column 3), another measure of phonological awareness. Compare
For the data in Exercise 6, verify that the 0.95 confidence interval for the regression parameters, using the R function regci with M regression and Schweppe weights, are(−0.2357, 0.3761) and (−0.0231, 1.2454). Also verify that if regci is used with OLS, the confidence intervals are (−0.4041,
Referring to Exercise 6, how do the results compare to the results obtained with the R function reglev?
For the data used in the previous exercise, compute 0.95 confidence intervals for the parameters using OLS as well as M regression with Schweppe weights.
The example in Section 6.6.1 reports the results of drinking alcohol for two groups of subjects measured at three different times. Using the group 1 data, compute an OLS estimate of the regression parameters for predicting the time 1 data using the data based on times 2 and 3. Compare the results
Compute the hat matrix for the data in Exercise 1. Which x values are identified as leverage points? Relate the result to the previous exercise.
For the data in Exercise 1, use the R function reglev to comment on the advisability of using M regression with Schweppe weights.
Let T be any regression estimator that is affine equivariant. Let A be any nonsingular square matrix. Argue that the predicted y values, yˆi, remain unchanged when xi is replaced by xiA.
Using the data in Exercise 1, show that the estimate of the slope given by βˆch is 0.0057.In contrast, the OLS estimate is 0.0045, and βˆm = 0.0042. Comment on the difference among the three estimates.
Discuss the relative merits of βˆch.
The average LSAT scores (x) for the 1973 entering classes of 15 American law schools, and the corresponding grade point averages (y), are as follows.x: 576 635 558 578 666 580 555 661 651 605 653 575 545 572 594 y: 3.39 3.30 2.81 3.03 3.44 3.07 3.00 3.43 3.36 3.13 3.12 2.74 2.76 2.88 2.96 Using the
Let X be a standard normal random variable, and suppose Y is contaminated normal with probability density function given by Eq. (1.1) of Chapter 1. Let Q = ρX +p 1−ρ2Y , −1 ≤ ρ ≤ 1. Verify that the correlation between X and Q isρpρ2 +(1−ρ2)(1− +K2).Examine how the correlation
If in the definition of the biweight midcovariance, the median is replaced by the biweight measure of location, the biweight midcovariance is equal to zero under independence. Describe some negative consequences of replacing the median with the biweight measure of location.
The definition of the percentage bend correlation coefficient, ρpb, involves a measure of scale, ωx , that is estimated with ωˆ = W(m), where Wi = |Xi − Mx | and m = [(1−β)n], and 0 ≤ β ≤ 0.5. Note that this measure of scale is defined even when 0.5 < β < 1 provided that m > 0. Argue
For the data in the file read.dat, test for independence using the data in columns 4 and 5 and β = 0.1.
For the data used in the last two exercises, test the hypothesis of independence using the function indt. Why might indt find an association not detected by any of the correlations covered in this chapter?
Examine the variables in the last exercise using the R functions mscor.
Using the data in the file read.dat, test for independence using the data in columns 2, 3, and 10 and the R function pball. Try β = 0.1, 0.3, and 0.5. Comment on any discrepancies.
The method of detecting outliers, described in Section 6.4.3, could be modified by replacing the MVE estimator with the Winsorized mean and covariance matrix. Discuss how this would be done and its relative merits.
Repeat the previous problem using the data for Group 2.
Using the Group 1 alcohol data in Section 8.6.2, compute the MVE estimate of correlation and compare the results with the biweight midcorrelation, the percentage bend correlation using β = 0.1, 0.2, 0.3, 0.4, and 0.5, Winsorized correlation usingγ = 0.1 and 0.2, and the skipped correlation.
Use the function cov.mve(m,cor=T) to compute the MVE correlation for the star data in Figure 9.2. Compare the results with the Winsorized, percentage bend, skipped, and biweight correlations, as well the M-estimate of correlation returned by the R function relfun.
Demonstrate that heteroscedasticity affects the probability of a type I error when testing the hypothesis of a zero correlation based on any type M correlation and nonbootstrap method covered in this chapter.
Repeat Exercise 1 with Spearman’s rho, the percentage bend correlation, and the Winsorized correlation.
Generate 20 observations from a standard normal distribution and store them in the R variable ep. Repeat this and store the values in x. Compute y=x+ep and compute Kendall’s tau. Generally, what happens if two pairs of points are added at (2.1, −2.4)?Does this have a large impact on tau? What

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Introduction To Robust Estimation And Hypothesis Testing 3rd Edition Rand R. Wilcox - Solutions

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