The lead auditor was reviewing the results of testing controls in the payroll expense area for a public company. The documentation for the testing showed that there was one instance of a part-time staff member being paid an incorrect hourly rate.

Required

a. Explain why the result shows a control exception (deviation).

b. Does the materiality of the exception influence the auditor’s conclusion about whether there is a deviation?

c. If the auditor selects a sample size of 45 for an IT-dependent manual control over payroll and finds one exception, what should the auditor conclude?