Answered step by step
Verified Expert Solution
Question
1 Approved Answer
21. Assuming the tolerable deviation rate is 5 percent, the expected population rate is 3 percent, and the allowance for sampling risk is 2 percent,
21. Assuming the tolerable deviation rate is 5 percent, the expected population rate is 3 percent, and the allowance for sampling risk is 2 percent, what should an auditor conclude if tests of 100 randomly selected documents reveals 4 deviations? a. Accept the sample results as support for assessing control risk below the maximum because the tolerable rate less the allowance for sampling risk equals the expected population deviation rate. b. Assess control risk at the maximum because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate. c. Assess control risk at the maximum because the tolerable rate plus the allowance for sampling risk exceeds the expected population deviation rate. d. Accept the sample results as support for assessing control risk below the maximum because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate. (AICPA ADAPTED)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started