ADA Statistical Sampling and Hypothesis Testing 2

Question 1

Which statistical measure describes the spread of data values around the mean in an audit population?

Accepted Answer

Standard deviation

Answer

Standard deviation quantifies how dispersed individual data points are from the population mean, indicating variability.

Question 2

In audit analytics, a confidence interval of 95% means:

Accepted Answer

If the sampling process were repeated, 95% of intervals would contain the true population parameter

Answer

A 95% confidence interval is a range constructed so that 95% of such intervals, under repeated sampling, would capture the true population value.

Question 3

Which test would an auditor use to determine whether the distribution of a numeric field follows Benford's Law?

Accepted Answer

Chi-square goodness-of-fit test

Answer

The chi-square goodness-of-fit test compares observed digit frequencies to those expected under Benford's Law to detect anomalies.

Question 4

Tolerable misstatement in a statistical audit sample represents:

Accepted Answer

The maximum error the auditor is willing to accept without modifying the opinion

Answer

Tolerable misstatement is the threshold below which errors would not affect the auditor's conclusions — it drives sample size calculations.

Question 5

A two-tailed hypothesis test is used when the auditor wants to detect:

Accepted Answer

Deviations in either direction from the expected value

Answer

A two-tailed test checks for significant differences in either direction, making it suitable when both overstatement and understatement are of concern.

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Certification Practice Test

ADA Statistical Sampling and Hypothesis Testing 2