Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

For which audit test would an auditor most likely use attribute sampling?

1. Verifying depreciation expense details

2. Estimating an expense account amount

3. Identifying incorrect account postings

4. Selecting receivables for confirmation

The correct answer is: Identifying incorrect account postings

Attribute sampling is particularly useful in audit tests where the auditor seeks to determine the rate of occurrence of specific attributes or characteristics within a sample of transactions or account balances. In the case of identifying incorrect account postings, the objective aligns with the purpose of attribute sampling, which is to assess how often errors occur in a population, such as erroneous entries or misclassifications in the accounting records. Using attribute sampling in this context allows the auditor to draw conclusions about the entire population of account postings based on a representative sample. The auditor can calculate the expected error rate and evaluate whether it falls within acceptable limits, thereby assessing the effectiveness of internal controls related to posting accuracy. In contrast, verifying depreciation expense details generally involves testing amounts and recalculating based on fixed asset schedules rather than assessing specific attributes. Estimating an expense account involves sampling for average amounts rather than particular characteristics, which is not the focus of attribute sampling. Selecting receivables for confirmation leans more toward monetary unit sampling or other methodologies focused on dollar amounts rather than attributes of account postings.