Question

As is true of multiple choice questions in general, different interpretations can lead to different possible answers. Please choose the best answer among the possible choices. Also, indicate any assumptions you are making.

________    7. The following are factors that influence the sample size. As the population size gets

larger, which factor becomes less of an issue?

1.    acceptable risk of assessing control risk too low.
2.    tolerable deviation rate.
3.    expected deviation rate.
4.    population size.

________    8. If the true state of the population is such that the mis-statements that exist exceed the

tolerable amount and the auditor concludes from the results of sampling that the mis-statements are less than the tolerable amount he has concluded    

1. correctly.
2. incorrectly, which is the risk of incorrect rejection.
3. incorrectly, which is the risk of incorrect acceptance.
4. that there were sampling errors.

________    9.   Which of the following is not a preferred method of random selection when using

                              statistical sampling plans?

1. random number table selection.

2.     block selection.
3.     systematic selection.
4.     random number generator selection.

______       10. When considering internal control in a computer environment, the term ‘general control

activities’ is used to describe controls that apply to all or many computer system in an organization. They include

1. development of programs and systems.
2. controls over changes to programs and systems.
3. controls over computer operations.
4. All of the above.
5. None of the above.

________     11. In terms of sampling in tests of controls, a situation in which the true population deviation

rate exceeded the tolerable rate, and the auditor’s conclusion based on the sample was that the deviation rate was less than the tolerable rate, would result in which of the following situations  

1. a correct decision.
2. an incorrect decision and an inefficient audit.
3. an incorrect decision and as ineffective audit.
4. none of the above.

Answer 1

7 ) D is correct as population has little to no effect on sample size

8) C, As incorrect acceptance is asituation when sample suggest that deviations are within tolerable limit but as a whole population deviation exceeds the tolerable limit. In simple words sample doesnt represent the true picture of whole population

9) B, Block selection

Beacuse in random sampling each unit of population has equal chance of being selected whereas in block selection method of sampling involves selecting a block tems from within a population. And sample cannot be collectedbeyond block

10) d , all of above since control is required at each stage being development , or any changes afterwards

11) C , as deviation rates are more than the one suggested by sample it will lead to incorrect decision and ineffective audit. As there would be misstatement present in the satement undetected and uncorrected and our audit process will be in effective as our audit plan is based on assumption that true population is within tolerable limit