CPA Auditing and Attestation (AUD) : Audit Sampling
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #1 : Audit Sampling
Logical Checks include:
Validity checks
Check Digits
All of the above
Limit Tests
All of the above
Logical checks include: validity checks, limit checks and check digits
Example Question #2 : Audit Sampling
Test Data
includes erroneous information
data used to test the sample size
all of the above
data used to check management for fraud
includes erroneous information
Test data will include erroneous data. The purpose of using erroneous data is to assess the system capability of validating data. It uses erroneous data to locate and identify the source of the error.
Example Question #2 : Audit Sampling
As an audit test, John James CPA uploaded client data to its software and compared the results to the client output. This is an example of
Parallel simulation
Check digits
Embedded audit modules
Validity Checks
Parallel simulation
This is an example of a parallel simulation. The auditor compares the output received from its system with the output received from the client system.
Example Question #2 : Audit Sampling
Of the following computer-assisted auditing techniques allows fictitious and real transactions to be processed together without client operating personnel being aware of the testing process?
Integrated test facility
Parallel simulation
Data entry monitor
Input control matrix
Integrated test facility
An integrated test facility uses test data commingled with actual data to test transactions.
Example Question #3 : Audit Sampling
Processing data through the use of simulated files provide an auditor with information about the operating effectiveness of controls. One of the techniques involved in this approach makes use of:
Controlled reprocessing
Input validation
An integrated test facility
Program code checking
An integrated test facility
An integrated test facility runs test transactions through the live system and posts to simulated files to provide an auditor with information about the operating effectiveness of controls.
Example Question #4 : Audit Sampling
When an engagement team confronts a difficulty in their audit due to a lack of understanding of a certain component of IT, the team should resort to which option?
Pursuing an independent IT specialist
Assume fraudulent activity
Trust management's word
Abandoning the testing area
Pursuing an independent IT specialist
When there is an area of testing which the engagement team feels it would need additional expertise in, the correct option would be to work with a specialist in the field rather than make assumptions, give up, or blindly trust.
Example Question #1 : Materiality
Judgments about materiality are:
are irrelevant to the size of the misstatement
are made regardless of the size of the misstatement
are not affected by the size or the nature of the misstatement
are affected by the size or nature of the misstatement
are affected by the size or nature of the misstatement
The definition of materiality is one that will influence the decision of the reader. Therefore, the size and nature of the decision will impact materiality
Example Question #2 : Materiality
In terms of materiality
The SEC sets the standard
the AICPA sets the standard
the auditor’s judgment sets the standard
IFRS sets the standard
the auditor’s judgment sets the standard
The auditor's judgment determines the materiality level that the auditor is willing to accept.
Example Question #2 : Materiality
In planning the audit, materiality provides a basis for:
The time necessary to perform the audit
Nature and extent of risk assessment procedures
Communication with the audit committee
The auditor's fee
Nature and extent of risk assessment procedures
Materiality is the basis for determining the nature and extent of risk. This is examined during the planning stages. The sample size and testing are developed based on the level of materiality.
Example Question #3 : Materiality
If new info becomes available that could require a reevaluation of the quantitative level of materiality applied during an audit of an issuer, then the auditor should:
Raise the materiality level but not lower it
Not change the materiality level once it has been established
Lower the materiality level but not raise it
Raise or lower the materiality level as appropriate to the situation
Raise or lower the materiality level as appropriate to the situation
If new information becomes available that could require a reevaluation of the quantitative level of materiality applied during an audit of an issuer, then the auditor should raise or lower the materiality level as appropriate to the situation.
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