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36 Cards in this Set
- Front
- Back
- 3rd side (hint)
When is attribute sampling appropriate? |
for discrete variables e.g. test of controls |
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Which criterion is appropriate for stratification in attribute sampling? |
turnover volume of goods sold |
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On which three factors does the sample size for an attribute test depend?
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- confidence level i.e. confidence coefficient (the greater it is, the larger the sample size)
- expected deviation rate (the greater the expected deviation rate in the population, the larger the sample size) - tolerable deviation rate (as the tolerable deviation rate increases, the sample size can decrease) |
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How does the sample size relate to the confidence level, expected deviation rate and tolerable deviation rate in a formula? |
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What does the expected deviation rate express and how is it determined? |
the expected population deviation rate, estimated or observed from apreliminary sample |
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How is the expected deviation rate called as well?(3) |
- expected rate of occurence - expected error rate - anticipated population deviation rate |
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What does the maximum tolerable deviation rate express? |
the maximum acceptable error rate that can be found in the population so that the control is still considered effective (e.g. the number of missing signatures on invoices under which the auditor considers there is no issue) |
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How is the maximum tolerable deviation rate determined? |
it is set by the auditor
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How large should themaximum tolerable deviation rate be set compared to theexpected deviation rate? |
higher than the expected deviation rate |
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What are the other expressions for tolerable deviation rate?(2) |
- desired precision - tolerable error rate |
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How is the difference between the maximum tolerable deviation rate and the expected deviation rate calledwhen determining the sample size?(2) |
- planned precision - desired precision (according to Wiley) |
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How does the size of the planned precision (allowance for sampling risk) influence the sample size? |
the tighter the planned precision, the larger larger the sample size |
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How is the sampling result evaluated regarding the control's effectiveness? |
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How is the sampling result projected to the population (EDR) |
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How is the achieved precision calculated (SE)? |
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What does the achieved precision indicate? |
the difference between the sample parameter (i.e. the actual sample result) and the true (but unknown) population parameter |
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What does the achieved precision represent in the projection of sample results to the population? |
the uncertainty |
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About which precision limit (upper or lower limit) are IA concerned with in attribute sampling? |
upper limit, i.e., with the risk of assessing control risk too low |
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When is a control considered ineffective? |
upper deviation limit (ULD = EDR + SE) > tolerable deviation rate |
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If no deviations have been found in the sample, is the maximum deviation rate equal to zero? |
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> 0 according to statistical results evaluation table |
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What effect does an increase in confidence level from 95% to 99% have on achieved precision if sample size is increased? |
achieved precision does not change |
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Given the sample size, the tolerable deviation rate, and the sample deviation rate, when is SAMPLING RISK in an attribute sampling plan the greatest? |
- the smaller the sample size (the smaller the sample size, the larger the achieved precision) - the smaller the difference between the tolerable deviation rate and the sample deviation rate |
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In what does a decrease in the confidence level result with regard to sampling effectiveness and efficiency? |
decrease in sampling effectiveness |
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In what does a decrease in the tolerable deviation rate result with regard to sampling effectiveness and efficiency? |
decrease in sampling efficiency |
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what are the other two attribute sampling methods? |
- discovery sampling - stop-or-go sampling |
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Which purpose is discovery sampling designed for?(2) |
- to determine whether fraud has occurred in the first place rather than to estimate its overall frequency, when even one case of fraud is critical - to uncover an attribute that exists in the population with a low or zero rate of occurrence
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how is the sample size in discovery sampling calculated? |
- in a way that it will include at least one instance of a deviation if deviations occur in the population at a rate larger than the assumed occurrence rate (assumption: occurrence rate is 0%)
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What does discovery sampling allow the IA to conclude if no errors in the sample are found? |
that the assumed low or zero error rate in the population is a valid assumption |
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What is the consequence if deviations are found in discovery sampling? |
statistical evaluation of results is impossible
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What is discovery sampling not suited for to assess? |
the level of assurance of internal controls |
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What does stop-or-go sampling aim to conclude regarding the error rate of the population? |
that the error rate is below a predefined level at at a given confidence level |
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what is stop or go sampling good for?(2) |
- for reducing the sample size when it is believed that the error rate in the population is low - for checking if the error rate is indeed below a certain level for the assurance level provided when the outcome of a system audit (e.g. audits of control) is questioned |
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how many sample items are examined in stop or go sampling? |
as few as possible,but as many as necessary to be able to state that the deviation rate in the population is below a specified rate at a specified confidence level |
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When is taking samples in stop-or-go sampling stopped? |
as soon as as the expected result is reached |
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how can the desired result (a specified maximum level of noncompliance) be achieved in stop or go sampling? |
by expanding the sample if deviations are found |
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What is stop-or-go sampling not suited for? |
for projecting the sample results to the population |
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