Dodge, CPA, is conducting tests of controls on cash disbursements of Truck Company. Dodge identified the preparation of a voucher and marking it as 'paid' prior to preparing and mailing a check to the vendor as an important control. Based on the importance of this control and the deviation rate observed in prior audits, Dodge established the following parameters:

Risk of overreliance 10 percent

Expected deviation rate 2.50 percent

Tolerable deviation rate 7 percent

For this test of controls, what is considered a 'deviation'?

What is the population for this test of controls?

Using the AICPA tables, what is the appropriate sample size for this test of controls?

Assume Dodge selects a sample of 100 cash disbursements. Assume Dodge discovers 2 deviations in this testing of the control. Use the AICPA tables to calculate the following:

Sample deviation rate

Upper limit deviation rate

Allowance for sampling risk

What is your conclusion?