Martin, a CPA, has selected a sample of 50 cash disbursement transactions and has found the following sample results: Two vouchers are not initialed to indicate that the supporting documents were inspected and the vendor's invoice recomputed before disbursement. However, Martin found that the supporting documents were all present, the details (quantity, price, etc.) of the documents were in agreement, and the vendor's invoice was correct. . One voucher is initialed, but the supporting documents are not in agreement and the vendor's invoice is incorrect. One voucher does not have the supporting documents attached. However, Martin has communicated with the department that received the item, the purchasing department, and the vendor and determined that the transaction is appropriate and recorded correctly. One voucher has been spoiled and has been marked to prevent any use but has been retained.

Required:

a. How many deviations has Martin detected? Explain why you believe each sample result is or is not a deviation.

b. Without regard to your answer to

a, assume that Martin found 5 deviations. What is the maximum deviation rate that could exist in the population of cash disbursements sampled at a 10 percent risk of assessing control risk too low.

c. Based on your answer to

b, what level of control risk could Martin assess on controls over cash disbursements?