Question
An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1%
An auditor desired to test credit approval on 10,000 sales invoices processed during the year.
The auditor designed a statistical sample that would provide 1% risk of assessing control risk too low (99% confidence) that not more than 7% of the sales invoices lacked approval. The auditor estimated from previous experience that about 2 % of the sales invoices lacked approval. A sample of 200 invoices was examined and 7 of them were lacking approval. The auditor then determined the achieved upper precision limit to be 8%.
The allowance for sampling risk was:
a. 5 %
b. 4 %
c. 3 %
d. 1 %
e. 1%
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