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Wiley CPA Test Bank - Audit Sampling | Wiley CPA Review | Another71 - YouTube
Channel: Another71
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hello everyone it's Jeff Elliot from
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another 71 comm and I want to take the
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next five minutes and cram this
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five-minute study session in for you and
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go over audit sampling and we're going
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to do five questions from the Wiley CPA
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Review Online test Bank and the cool
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thing about the Wiley online test Bank
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is number one if you buy it for me it's
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only eighty seven dollars and it lasts a
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whole year and so you don't have to have
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some big investment into some software
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it's only 87 bucks and okay and it lasts
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a whole year so if you if you're
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studying for it from one year and then a
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new year rolls over like from 2010 to
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2011 it just updates so today we're
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going to talk about audit sampling and
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audit sampling is basically when you
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audit less than 100 percent of a
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population and so for instance you've
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seen my gumball machine in my office if
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you've seen some of my previous videos
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and let's say that the gumball machine
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had 100 gumballs and they're supposed to
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have either blueberry or blackberry
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gumballs those are blue and black dots
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if you can't see that so weird so 100
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gumballs is our population we want to
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audit 20 gumballs to see if they are
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either blueberry or Blackberry that's
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our sample size and then our
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characteristic is are they blueberry or
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blackberry and so within audits and
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blame there's two types of sampling
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they're statistical and non-statistical
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an advantage of both is that both
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statistical and non-statistical help you
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to plan the sample help you to execute
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the actual sampling and then they both
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help you to evaluate the results but
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some an advantage over statistical is
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that it's more efficient it helps with
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sufficiency helps evaluate the
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sufficiency of the evidence that you've
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collected helps you to decide is this
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sample size sufficient and it helps to
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quantify sampling risk which is one of
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the major advantages of statistical
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sampling it helps you to quantify
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sampling risk
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what is sampling risk it says if I take
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those 20 gumballs and draw a conclusion
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about the population based on those 20
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gumballs and my conclusion happens to be
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different than if I had
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gone ahead and audited all 100 gumballs
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well that sampling risk it's arriving at
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an incorrect conclusion and it has to do
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with your sample size some disadvantages
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of statistical sampling is that you have
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to train your staff and then you have to
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take the time to do to design the sample
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and then you actually have to go and
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select the items so those are three
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disadvantages let's not I got some
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multiple-choice questions and if you're
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on another 71 comm these are right below
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the post if you're watching this on
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youtube click the link right below the
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video and it'll take you to the post on
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another seven 1.com and you'll see the
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questions from the wiley online test
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bank number one which of the following
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is included as part of the definition of
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audit sampling inquiry and observation
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procedures documentary evidence the
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evaluation of some characteristic or
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statistical techniques and at-sea
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evaluation of some characteristic which
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we just talked about blueberry or
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blackberry we're looking at a
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characteristic number to an advantage of
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statistical sampling over non
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statistical sampling is that statistical
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sampling helps an auditor to minimize
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the failure to detect errors and
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irregular irregularities eliminate the
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risk of non sampling errors reduce the
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level of audit risk and materiality to a
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relatively low amount or measure the
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sufficiency that evidential matter
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obtained and we know that's the answer D
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measure the sufficiency which of the
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following is an element of sampling risk
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choosing an audit procedure that is
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inconsistent with the audit objective
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now remember we talked about sampling
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risk which has to do with our with our
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sample size in regards to the population
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choosing a sample size that is too small
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to achieve the sampling objective that's
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the answer if we let's say there's a
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hundred gumballs and we only choose one
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well that's an element of sampling risk
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it's a risk that our sampling size is
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is too small so if we if we evaluate one
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gumball and it's either blueberry
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blackberry and say oh yeah the entire
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population is fine but the other 99 are
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whatever raspberry well that sampling
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risk we drew an incorrect conclusion
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than we would have obtained if we had
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done audited the entire population which
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of the following best illustrates the
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concept of sampling risk a randomly
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chosen sample may not be representative
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of the population as a whole on the
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characteristic of interest and that's
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the answer we know that we know that's
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the answer and then finally which of the
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following best describes the distinct
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the distinguishing feature of
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statistical sampling it provides for
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measuring mathematically the degree of
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uncertainty that results from examining
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only a part of the data and that's it
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we're only said we're only looking at
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part of the data only instead of the
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population we're only looking at a
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sample size so the answer is a I hope
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this has been helpful I tried to get in
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there be quick and and so check out the
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Wiley online test bank I'll talk to you
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soon
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