# cpa audit review ch 15 review 9

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1. What type of sampling would be designed to estimate a numerical measurement of a population, such as a dollar value?
Sampling for variables.

Variables sampling is used to estimate the amount of misstatement in or the amount of a population. In auditing, this process involves estimating the monetary value of an account balance or other accounting totals. The result is often stated in terms of a point estimate plus or minus a stated dollar amount (the precision at the desired level of confidence).
2. The major reason that the difference and ratio estimation methods are expected to produce audit efficiency is that the
Variability of the populations of differences or ratios is less than that of the populations of carrying amounts or audited values.

Difference estimation approximates total misstatement in the population by calculating the mean difference between the audited and carrying amounts in the sample and then multiplying by the number of population items. Ratio estimation approximates the total population misstatement by multiplying the proportion of the sample misstatement times the population carrying amount. The variability in both of these estimates is likely to be smaller than the variability within the population. Because the sample size varies directly with the variability of the population, the use of differences or ratios will usually allow for smaller sample sizes and greater efficiency in sampling.
3. Is the following statement true concerning monetary-unit sampling (MUS), also known as probability-proportional-to-size sampling?

The auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan.
yes -The auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan.

MUS is one technique whereby the auditor can measure and control the risks associated with observing less than 100% of the population. The auditor can quantify and measure the risk of accepting a client’s recorded amount as fair when it is materially misstated.
4. Is the following statement true concerning monetary-unit sampling (MUS), also known as probability-proportional-to-size sampling?

The sampling interval is calculated by dividing the number of physical units in the population by the sample size.
false -- MUS is one technique whereby the auditor can measure and control the risks associated with observing less than 100% of the population. The auditor can quantify and measure the risk of accepting a client’s recorded amount as fair when it is materially misstated.

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 Author: Joens1313 ID: 277936 Filename: cpa audit review ch 15 review 9 Updated: 2014-07-01 04:28:12 Tags: cpa audit review 15 Folders: Description: cpa audit review ch 15 review 9 Show Answers:

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