College of Accounting Education

3/F F. Facundo Hall, B & E Bldg.

Matina, Davao City Philippines
Phone No.: (082) 244-3400

ACP323
ACTIVITY

AUDIT SAMPLING
1. The entire set of data from which a sample is selected and about which the auditor wishes to
draw conclusions is
A. Population
B. Sample
C. Sampling unit
D. Database
2. The risk that the auditor’s conclusion based on a sample may be different from the conclusion
if the entire population were subjected to the same audit procedure is
A. Sampling risk
B. Non-sampling risk
C. Risk of incorrect rejection
D. Risk of incorrect acceptance
3. Sampling risk that leads the auditor to conclude that controls are more effective than they
actually are is
A. Risk of assessing control risk too low
B. Risk of assessing control risk too high
C. Risk of incorrect rejection
D. Risk of incorrect acceptance
4. Sampling risk that leads the auditor to conclude that a material misstatement exists when in
fact it does not is
A. Risk of assessing control risk too low
B. Risk of assessing control risk too high
C. Risk of incorrect rejection
D. Risk of incorrect acceptance
5. Of the four erroneous conclusions from a sampling risk, the auditor is primarily concerned
with
A. Risk of assessing control risk too low
B. Risk of assessing control risk too high
C. Risk of incorrect rejection
D. Risk of incorrect acceptance
6. Which is not true of an “Alpha risk” in sampling?
I. It is the risk of assessing control risk too high or the risk of incorrect rejection.
II. It relates to the effectiveness of the audit.
III. It usually leads the auditor to additional work to establish that initial conclusions were
incorrect.
A. I and II only
B. I and III only
C. II and III only
D. I, II, and III
7. The likelihood of assessing control risk too high is the risk that the sample selected to test
controls
 College of Accounting Education
3/F F. Facundo Hall, B & E Bldg.
Matina, Davao City Philippines
Phone No.: (082) 244-3400

A. Does not support the auditor’s planned assessed level of control risk when the true
operating effectiveness of the control structure justifies such an assessment
B. Contains misstatements that could be material to the financial statements when
aggregated with misstatements in other account balances or transactions classes
C. Contains proportionately fewer monetary errors or deviations from prescribed controls
than exist in the balance or class as a whole
D. Does not support the tolerable error for some or all of management’s assertions
8. A misstatement or deviation that is demonstrably not representative of misstatements or
deviations in a population
A. Sampling risk
B. Anomaly
C. Error
D. Corruption
9. The process of dividing a population into subpopulations, each of which is a group of sampling
units which have similar characteristics (often monetary value) is
A. Division
B. Stratification
C. Grouping
D. Characterization
10. The risk that the auditor reaches an erroneous conclusion for any reason not related to
sampling risk is
A. Sampling risk
B. Non-sampling risk
C. Audit risk
D. Detection risk
11. Which of the following does not constitute non-sampling risk?
A. Use of inappropriate audit procedures
B. Misinterpretation of audit evidence
C. Failure to recognize a misstatement or deviation
D. Failure of a sample to represent the population
12. If the audit procedure is not applicable to the selected item, as when for example, a voided
check is selected while testing for evidence of payment authorization, which of the following
is incorrect?
A. The auditor shall treat the item as a deviation.
B. The auditor shall perform the audit procedure on a replacement item.
C. If the auditor is satisfied that the voiding of the check is proper, such an item does not
constitute deviation.
D. The replacement item, as the case may be, must be chosen by the auditor.
13. If the auditor is unable to apply the designed audit procedures, or suitable alternative
procedures, to a selected item
I. The auditor shall treat that item as a deviation from the prescribed control in the case
of tests of controls,
II. The auditor shall treat that item as a misstatement, in the case of tests of details
A. I only
B. II only
C. Both I and II
 College of Accounting Education
3/F F. Facundo Hall, B & E Bldg.
Matina, Davao City Philippines
Phone No.: (082) 244-3400

D. Neither I nor II
14. The decision whether to use statistical or non0statistical sampling depends upon the
A. Philippine Standards on Auditing
B. Auditor’s judgment
C. Size of the population
D. Generally Accepted Auditing Standards
15. An advantage of using statistical over non-statistical sampling methods in tests of controls is
that the statistical methods
A. Can more easily convert the sample into a dual-purpose test useful for substantive testing
B. Eliminate the need to use judgment in determining appropriate sample sizes
C. Afford greater assurance than a non-statistical sample of equal size
D. Provide an objective basis for quantitatively evaluating sample risk
16. Which of the following is a characteristic of the statistical sampling approach?
I. Random selection of the sample items
II. The use of probability theory to evaluate sample results, including measurement of
sampling risk
A. I only
B. II only
C. Both I and II
D. Neither I nor II
17. S1. With statistical sampling, items are selected in a way that each sampling unit has a known
probability of being selected.
S2. With non-statistical sampling, judgment is used to select sample items.
A. True True
B. True False
C. False False
D. False True
18. Per PSA 530, the principal methods of selecting samples are (choose the exception)
A. Random selection
B. Systematic selection
C. Haphazard selection
D. Block selection
19. Which of the following contains incorrect description of methods of sampling/ selection
described?
A. Random selection is applied through random number generators, for example, random
number tables.
B. Monetary unit sampling is a type of value-weighted selection in which sample size,
selection and evaluation results in a conclusion in monetary amounts.
C. Haphazard selection is a statistical sampling technique in which the auditor selects the
sample without following a structured technique.
D. Block selection involved selection of a block(s) of contiguous items from within the
population.
20. In a systematic selection, the number of sampling units in the population is divided by the
sample size to give a sampling interval, for example 50, and having determined a starting
point within the first 50, each 50th sampling unit thereafter is selected. Which of the following
is incorrect about the systematic selection technique?
 College of Accounting Education
3/F F. Facundo Hall, B & E Bldg.
Matina, Davao City Philippines
Phone No.: (082) 244-3400

A. The starting point in this technique may be determined haphazardly.

B. The sample is more likely to be truly random if it is determined by use of a computerized
random number generator or random number tables.
C. The auditor would need to determine that sampling units within the population are not
structured in such a way that the sampling interval corresponds with a particular pattern
in the population.
D. If an audit procedure is not applicable on a unit in the sample selected, the auditor treats
it as an error.
21. As a result of tests of controls, an auditor assessed control risk too low and decreased
substantive testing. This assessment occurred because the true deviation rate in the
population was
A. Less than the risk of assessing control risk too low, based on the auditor’s sample
B. Less than the deviation rate in the auditor’s sample
C. More than the risk of assessing control risk too low, based on the auditor’s sample
D. More than the deviation rate in the auditor’s sample
22. Which of the following combinations results in a decrease in sample size in a sample for
attributes?
Risk of assessing Tolerable rate Expected population
control risk too low deviation rate
A. Increase Decrease Increase
B. Decrease Increase Decrease
C. Increase Increase Decrease
D. Increase Increase Increase
23. How would increases in tolerable misstatement and assessed level of control risk affect the
sample size in a substantive test of details?
Increase in tolerable misstatement Increase in assessed level of control risk
A. Increase sample size Increase sample size
B. Increase sample size Decrease sample size
C. Decrease sample size Increase sample size
D. Decrease sample size Decrease sample size
24. Which of the following statements is correct concerning statistical sampling in tests of
controls?
A. As the population size increases, the sample size should increase proportionately.
B. There is an inverse relationship between the expected population deviation rate and the
sample size.
C. In determining tolerable rate, an auditor considers detection risk and the sample size.
D. Deviations from specific internal control procedures at a given rate ordinarily result in
misstatements at a lower rate.
25. Per PSA 530, projection of sample results to the population, is only necessary in the case of
A. Deviations (test of controls)
B. Misstatement (test of details)
C. A or B
D. Neither A nor B
 College of Accounting Education
3/F F. Facundo Hall, B & E Bldg.
Matina, Davao City Philippines
Phone No.: (082) 244-3400

COMPARATIVE INFORMATION AND OTHER INFORMATION

26. These are the amounts and disclosures included in the financial statements in respect of one
or more periods in accordance with the applicable financial reporting framework
a. Corresponding figures
b. Current period figures
c. Comparative financial statements
d. Comparative information
27. Comparative information where amounts and other disclosures for the prior period
Ø Are included as an integral part of the current period financial statements, and
Ø Are intended to be read only in relation to the amounts and other disclosures relating
to the current period
a. Corresponding figures
b. Current period figures
c. Comparative financial statements
d. Comparative figures
28. Comparative information where amounts and other disclosures for the prior period was
Ø Included for comparison with the financial statements of the current period but,
Ø If audited, are referred to in the auditor’s opinion are called
a. a. Corresponding figures
b. Current period figures
c. Comparative financial statements
d. Comparative figures

ABC Trading prepares comparative financial information. Audited financial statements for the current
year 2018 are presented with audited financial statements for 2017 and 2016 and unaudited 2015
financial statements.

29. Auditor’s opinion for corresponding figures covers

a. 2018 only
b. 2017 only
c. 2018, 2017, and 2016 only
d. 2018, 2017, 2016, 2015
30. Auditor’s opinion for comparative financial statements covers
a. 2018 only
b. 2017 only
c. 2018, 2017, and 2016 only
d. 2018, 2017, 2016, 2015
31. Auditor’s responsibility when a material misstatement of fact is identified
a. Discuss the matter with management
b. Request management to consult with qualified third party
c. Notify the audit committee
d. Seek legal advice
32. If management is unwilling to rectify a material misstatement of fact in the other information
a. Qualify the opinion or add an emphasis of matter paragraph
b. Request management to consult with a qualified third party
c. Notify the audit committee
 College of Accounting Education
3/F F. Facundo Hall, B & E Bldg.
Matina, Davao City Philippines
Phone No.: (082) 244-3400

d. Seek legal advice

33. Auditor’s responsibility when a material inconsistency is identified
a. Determine whether the audited financial statements or the other information needs
to be corrected
b. Qualify the opinion or express an adverse an opinion
c. Ask management to appropriately amend the financial statements
d. Seek legal advice
34. If management is unwilling to rectify its financial statements to resolve a material
inconsistency with the other information
a. Qualify the opinion or add an emphasis of matter paragraph
b. Add an Emphasis of Matter paragraph describing the inconsistency
c. Qualify the opinion or express an adverse opinion
d. Add an Other Matter paragraph describing the inconsistency
35. If management is unwilling to rectify the other information to resolve a material inconsistency
with the audited financial statements
a. Qualify the opinion or add an emphasis of matter paragraph
b. Add an Emphasis of Matter paragraph describing the inconsistency
c. Qualify the opinion or express an adverse opinion
d. Add an Other Matter paragraph describing the inconsistency

END