General
KSP and MUS are two substantive sampling techniques. Which one is statistical, and which one is non-statistical?
MUS – Statistical; KSP – Non-statistical
What is the minimum sample size for MUS?
Three (3).
What is the minimum sample size to conclude for KSP if there is a misstatement found? Clue: Think of the Netflix series ‘Stranger Things’.
Eleven (11).
We use substantive attribute sampling to test financial data or non-financial data?
Non-financial data.
Inquiry alone is never sufficient. What tests of details procedures do we pair with inquiry to obtain sufficient, appropriate evidence? Name at least two.
Inspection, observation, external confirmation, recalculation, and reperformance.
True or False: Samples should be extended when the upper precision limit and projected misstatement is equal to or greater than the performance materiality.
False. Samples can be extended when only the Upper Precision Limit is equal to or greater than the performance materiality. When both the UPL and projected misstatement exceed PM, such difference should be communicated to management to either be resolved/reconciled. Otherwise, this will be proposed as an adjustment.
If RoMM is assessed as low and you have already collected a moderate amount of evidence, what would be the new minimum sample size?
Zero (0). The KAM alert will read: “Given that moderate other audit evidence has been obtained and low RoMM has been assessed, sampling is not necessary.
Give us an original example of how you can use substantive attribute sampling as tests of details on one of your upcoming engagements.
Did the answer make sense or nah?