The questions below relate to estimating the sample size necessary for tests of transaction classes given the specified decisions for the considerations that affect sample size.

Required:

a. For each of the situations 1 through 6 above, what is the initial sample size for the test of controls?

b. Based on your understanding of the relationships among the factors above and sample size, explain the effect of changing each of the following while the others remained unchanged.

1. Risk of assessing control risk too low is increased.

2. Tolerable rate is decreased.

3. Number of deviations expected increases.

4. Population size increases.

Transcribed Image Text:

Situation Risk of assessing control risk too low Tolerable Expected number rate of deviations 123456 10% 7% 5% 10% 7% 12% 10% 12% 5% 25% 10% 10% 000213 3