151. MUS interval is CU 50,000 with a random start of CU 20,000. Items A (CU 30,000), B (CU 55,000) and C (CU 70,000) run in that order. Which item is hit by the 70,000th unit?

A) Item B
B) Item A
C) Item C
D) None of the items

Correct: A difficult ISA 530

Cumulative values: A 0 to 30,000, B 30,000 to 85,000, C 85,000 to 155,000. The hit at 20,000 is A, 70,000 is B and 120,000 is C.

152. A single item of CU 80,000 is in a MUS population with an interval of CU 50,000. What happens to it?

A) It may or may not be selected
B) It is certain to be selected
C) It is never selected
D) It is tested only on a sample basis

Correct: B difficult ISA 530

Items bigger than the sampling interval are certain to be selected at least once, which is why MUS focuses on large items.

153. Systematic selection starts at item 7 with an interval of 25. What is the 4th item selected?

A) Item 57
B) Item 107
C) Item 82
D) Item 32

Correct: C difficult ISA 530

The items are 7, 32, 57, 82, so the fourth is item 82.

154. An item with a book value of CU 40,000 has an audit value of CU 30,000. The MUS interval is CU 100,000. What is the projected misstatement?

A) CU 100,000, the interval itself
B) CU 10,000, the misstatement itself
C) CU 75,000, using the audit value
D) CU 25,000

Correct: D difficult ISA 530

Tainting = 10,000 / 40,000 = 25%; projected misstatement = 25% x 100,000 = CU 25,000.

155. Expected sales are CU 5,000,000, actual are CU 5,600,000 and the auditor investigates variances above 10%. What happens?

A) Investigate, 12% exceeds 10%
B) Ignore it, as the variance is 8%
C) Ignore it, as the variance is 6%
D) Investigate, as the variance is 20%

Correct: A difficult ISA 520

Variance = 600,000 / 5,000,000 = 12%, which exceeds the 10% threshold, so it is investigated.

156. Which technique checks whether leading digits in a population look natural, to spot invented figures?

A) Haphazard sampling of items
B) Benford's law test
C) Attribute sampling of controls
D) Counting petty cash balances

Correct: B difficult ISA 500

Benford's law compares the frequency of first digits to expected patterns; unusual patterns can indicate manipulated or fabricated numbers.

157. Which journal is most suspicious in a journal data analytics test?

A) Routine entry posted on a weekday
B) Small entry posted by the accountant
C) Round-sum Friday night entry
D) Recurring rent entry at month end

Correct: C difficult ISA 500

Round amounts, weekend or late postings and unusual users are classic criteria for selecting journals that could signal management override.

158. Why is a positive blank confirmation request stronger than one showing the balance?

A) It is sent by the client itself
B) It costs the auditor nothing
C) It needs no reply from anyone
D) Respondent states the balance

Correct: D difficult ISA 505

A blank form asks the respondent to fill in the amount, which reduces the risk of simply signing a figure without checking it.

159. A customer does not reply to a confirmation. What alternative procedure is common?

A) Examine later cash receipts
B) Ignore the balance
C) Send the request again by email only
D) Ask the client to sign

Correct: A difficult ISA 505

Alternative procedures include checking subsequent receipts and the supporting dispatch documents for the balance.

160. The auditor receives a bank statement directly from the bank. How reliable is it?

A) Unreliable
B) Highly reliable
C) Unusable
D) Only reliable if client signs

Correct: B difficult ISA 500

Evidence obtained directly from an independent external source is more reliable than evidence from within the client.

161. In a remote audit, the client shares its screen to show a ledger. What is a risk?

A) Evidence is always stronger
B) The ledger becomes more complete
C) Information may be selected
D) Auditors cannot ask any questions

Correct: C difficult ISA 500

In a screen share the auditor may not see the whole system, so there is a risk of selective display, and the auditor should control what is accessed.

162. Before sampling, why does the auditor reconcile the population list to the ledger total?

A) To select the items by hand
B) To raise the planned sample size
C) To reduce the sampling interval
D) To confirm it is complete

Correct: D difficult ISA 530

The auditor must be satisfied that the population from which the sample is drawn is complete and consistent with the ledger.

163. A sample has 40 items and 2 deviations. The tolerable rate is 5%. What is the sample rate and conclusion?

A) 5%, at the limit
B) 2.5%, if one deviation was found
C) 7.5%, if three deviations were found
D) 20%, if eight deviations were found

Correct: A difficult ISA 530

2 / 40 = 5%, which equals the tolerable rate. With no allowance for sampling risk the auditor cannot conclude the control is reliable.

164. What do audit analytics on 100% of payments to detect duplicates replace?

A) Professional scepticism
B) Sampling for that test
C) The need for engagement letters
D) Management representations

Correct: B difficult ISA 500

Testing the whole population with software can replace sampling for that specific test, although the auditor still follows up exceptions.

165. A fall in gross margin from 30% to 24% is shown by an overall review at the end. What should the auditor do?

A) Raise performance materiality
B) Ignore it
C) Investigate the reason
D) Cancel the planning meeting

Correct: C difficult ISA 520

An unexpected change in a key ratio near the end of the audit may indicate a previously unidentified risk of misstatement, so it must be explained.

166. The auditor tests all 20 items above CU 100,000 worth CU 6m of a CU 10m population. What coverage is achieved?

A) 60%
B) 10%, one tenth of the population
C) 20%, the number of items tested
D) 6%, six million as a rate

Correct: A difficult ISA 530

6m / 10m = 60% of the population by value is tested by examining the large items.

167. Stratifying a population by value helps the auditor to what?

A) Test every single item in it
B) Test large items more
C) Avoid sampling altogether
D) Reduce the size of the population

Correct: B difficult ISA 530

Stratification splits the population into groups so that more work can be focused on high-value or high-risk items.

168. Attribute sampling is mainly used to test what?

A) Share prices on the market
B) Account balances in value terms
C) Control deviation rates
D) Tax rates applying to profits

Correct: C difficult ISA 530

Attribute sampling estimates the rate of occurrence of a characteristic, such as a control deviation, in a population.

169. Sampling risk arises because what?

A) The evidence is quite old
B) Auditors misread the documents
C) The wrong procedure is used
D) It uses a sample only

Correct: D difficult ISA 530

Sampling risk is the risk that the conclusion from a sample may differ from the conclusion if the whole population were tested.

170. Using the wrong audit procedure and failing to spot an error is which kind of risk?

A) Non-sampling risk
B) Sampling risk on the test
C) Inherent risk of the area
D) Business risk of the client

Correct: A difficult ISA 530

Non-sampling risk arises from factors unrelated to sampling, such as using inappropriate procedures or misinterpreting evidence.

171. Which factor would INCREASE the required sample size?

A) A lower assessed risk level
B) A higher expected error
C) A higher tolerable error rate
D) A lower required confidence

Correct: B difficult ISA 530

A higher expected error rate, higher assessed risk, lower tolerable error and a higher confidence level all increase sample size.

172. A population of 5,000 items is tested with a sample of 50. What percent is sampled?

A) 0.1%
B) 10%
C) 1%
D) 50%

Correct: C difficult ISA 530

50 / 5,000 = 1%.

173. The auditor uses software to match payments to invoices for the whole year. What is this called?

A) Inquiry of the client staff
B) Haphazard sampling of items
C) Observation of the process
D) A CAAT

Correct: D difficult ISA 500

Audit software that tests entire populations is a computer-assisted audit technique (CAAT).

174. Test data is processed through the client's system with a known error. What does it check?

A) Programmed controls detect
B) That the client is honest
C) That the stock exists in store
D) That the audit fees are paid

Correct: A difficult ISA 500

Test data checks whether application controls correctly accept valid and reject invalid items.

175. Which procedure is the repeat of a control by the auditor?

A) Recalculation
B) Reperformance
C) Observation
D) Inquiry

Correct: B difficult ISA 500

Reperformance is the auditor's independent execution of procedures or controls originally performed by the entity.