Question

1) The concept of stratification relates to _______.

A) only targeting certain accounts for audit procedures to be applied to

B) the idea of categorizing a sample based on certain sample characteristics

C) liability accounts only

D) equity accounts only

2)In which of the following situations is the auditor most likely to use audit data analytics?
A) Internal controls are weak.

B) The available data is reliable and comes from a strong system of internal controls.

C) Certain audit procedures are required by professional standards.

D) The auditor needs to have data that is relevant to the audit test.

3) The auditor’s conclusion based on the sample _______.

A) should always be applied to the sample only and not the population

B) should always be applied to the population only and not the sample

C) may be different than the conclusion drawn if the auditor had audited the entire population

D) will always be the same as the conclusion drawn if the auditor had audited the entire population

4)The more procedures that are directed to the same audit assertion, _______.

A) the less an auditor will need to rely on the evidence provided by one test alone and the greater the sample size required

B) the less an auditor will need to rely on the evidence provided by one test alone and the smaller the sample size required

C) the less procedures should be directed to other audit assertions

D) the more an auditor will need to rely on the evidence provided by one test alone and the smaller the sample size required

Answer 1

1) B) the idea of categorizing a sample based on certain sample characteristics

• Data stratification is the separation of data into smaller, more defined strata based on a predetermined set of criteria. A simpler way to view data stratification is to see it as a giant load of laundry that needs to be sorted.

2) B) The available data is reliable and comes from a strong system of internal controls.

• The main driver of using data analytics is to improve audit quality. It allows auditors to more effectively audit the large amounts of data held and processed in IT systems in larger clients.

3) C) may be different than the conclusion drawn if the auditor had audited the entire population

4) A) the less an auditor will need to rely on the evidence provided by one test alone and the greater the sample size required