14. An explanatory paragraph would be added to an unqualified

audit report [good report] for:

a. An accounting (GAAP) problem.

b. A lack of evidence (scope) problem.

c. The companys status as a viable entity (i.e. going

concern issue) is doubtful.

d. Lack of independence.

26. An auditor wishes to evaluate a test of controls. A sample

of 120 items was selected and FOUR deviations are detected.

Some of the auditor's initial parameters were as follows:

Tolerable deviation rate 6.0%

Sampling Risk i.e. Risk of Overreliance 10.0%

Use the tables provided to answer the following two-part

question:

I. What is the (achieved; Computed) Upper deviation

Rate (in percent)?

II. Can the auditor rely on the internal control

structure to do less substantive testing for the

assertion the control involves? i.e. Are controls

considered to be acceptable?

a. I 4.4; II No e. I 6.6; II No

b. I 4.4; II Yes f. I 6.6; II Yes

c. I 5.5; II No g. None of the above.

d. I 5.5; II Yes