Question

For each of the following independent statements, state whether you agree or disagree with the statement and explain your answer.
Required

1. The tolerable deviation rate varies inversely with sample size.

2. Inspection of signatures on time cards is an example of attribute sampling.

3. Sampling error occurs when an auditor incorrectly interprets the results of the sample.

4. Statistical and non statistical sampling allow the auditor to quantify sampling risk.

5. It is the auditor's responsibilities to ensure that an external expert engaged to support that audited

   financial statements has the appropriate qualifications and reputation within their field of expertise.

Answer 1

1).The tolerable deviation rate varies inversely with sample size- Yes- deviation rate directly affects the sample size.. As it increase, the samples size increases, However, the tolerable deviation rate varies inversely with sample size. As it decreases, the sample size increases. The tolerable deviation rate is the largest percentage variance experienced in audit sampling that an auditor will accept in order to rely upon a specific control. If the deviation rate is higher than this threshold value, then the auditor cannot rely upon the control..

2). Inspection of signatures on time cards is an example of attribute sampling- Yes- The verification of signature on cards is giving the auditor to confirmation that person/population was presented . The concept is frequently used by auditors to test a population for certain characteristics, such as the presence of person. The concept can be used to determine whether various accounting controls are functioning in a reliable manner.

3). Sampling error occurs when an auditor incorrectly interprets the results of the sample.- Yes- The sample error occurs when sample chosen is not representative of the population from which it was drawn or the proper sampling method was selected and applied but failed to uncover material misstatements.

4). Statistical and non statistical sampling allow the auditor to quantify sampling risk.- yes- auditor can choose one of two methods: the statistical approach or the judgmental (non-statistical) approach. The statistical approach uses computer-based technology to come up with sample size numbers and randomly select items from the population. The non statistical approach, on the other hand, employs the auditor’s judgment and experience to come up with a sample size.

5). It is the auditor's responsibilities to ensure that an external expert engaged to support that audited financial statements has the appropriate qualifications and reputation within their field of expertise.- Yes -The auditor should consider the following to evaluate the professional qualifications of the specialist in determining that the specialist possesses the necessary skill or knowledge in the particular field

1. The professional certification, license, or other recognition of the competence of the specialist in his or her field, as appropriate
2. The reputation and standing of the specialist in the views of peers and others familiar with the specialist's capability or performance
3. The specialist's experience in the type of work under consideration.