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

Why might a CPA use attribute sampling for certain audit tests?

1. To estimate quantitative data for account balances

2. To establish a rate of failure in processes

3. To verify the physical existence of assets

4. To analyze larger trends in financial statements

The correct answer is: To establish a rate of failure in processes

Attribute sampling is a statistical method used in auditing that focuses on determining the existence of certain characteristics or attributes within a population. When a CPA chooses to use attribute sampling, the primary aim is to establish the rate of failure in processes or controls. This means that the auditor is attempting to find out how often a specific attribute—such as compliance with internal controls, proper approvals, or adherence to procedures—occurs within the selected sample. By using attribute sampling, the CPA can effectively assess the efficiency or effectiveness of internal controls by determining the proportion of items that are compliant versus those that are not. This method is especially useful in tests of controls, where the goal is to evaluate whether a system or process is functioning as intended. The results can then inform the auditor's assessment of risk and the nature, timing, and extent of further audit procedures required. In contrast, other options relate to different aspects of the audit process. For example, estimating quantitative data for account balances typically involves monetary sampling rather than attribute sampling. Verifying the physical existence of assets often requires detailed tests of specific items, which is also not congruent with the purpose of attribute sampling. Lastly, analyzing larger trends in financial statements usually falls under analytical procedures, which involve different methodologies entirely. Hence