*not low it was wrong
*fill in the blanks, the other ones are correct
You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which 3,000 were over $25,000. Jian Zhang, CPA, your supervisor, asked you to use a tolerable deviation rate of 9 percent (although she expects the rate to be only approximately 0.25 percent) and a 5 percent risk of assessing control risk too low. Use the following to determine the planned assessed level of control risk and the assessed level of control risk. (Planned) Assessed Level of Control Risk Low Moderate Slightly below the maximum Maximum Tolerable Deviation Rate 2-7% 6-12% 11-20% Over 20% a. What is the planned assessed level of control risk? Moderate O Low Slightly below the maximum O Maximum FIGURE 9.4 Statistical Sample Sizes for Tests of Controls at 5 Percent Risk of Assessing Control Risk Too Low (with Allowable Number of Deviations in Parentheses) Tolerable Deviation Rate 9% 10% 15% 20% Expected Population Deviation Rate (As Percentages) 0.00% 0.25 0.50 0.75 1.00 1.25 58(1) 1.50 1.75 2% 3% 4% 5% 6% 7% 8% 149(0) 99(0) 74(0) 59(0) 49(0) 42(0) 36(0) 236(1) 157(1) 117(1) 93(1) 78(1) 66(1) 58(1) 157(1) 117(1) 93(1) 78(1) 66(1) 58(1) 208(2) 117(1) 93(1) 78(1) 66(1) 58(1) 156(2) 93(1) 78(1) 66(1) 58(1) 156(2) 124(2) 78(1) 66(1) 192(3) 124(2) 103(2) 66(1) 58(1) 227(4) 153(3) 103(2) 88(2) 77(2) * 181(4) 127(3) 88(2) 77(2) 208(5) 127(3) 88(2) 77(2) 150(4) 109(3) 77(2) 173(5) 109(3) 95(3) 195(6) 129(4) 95(3) 148(5) 112(4) 167(6) 112(4) 185(7) 129(5) 146(6) 32(0) 51(1) 51(1) 51(1) 51(1) 51(1) 51(1) 51(1) 68(2) 68(2) 68(2) 68(2) 84(3) 84(3) 84(3) 100(4) 100(4) 158(8) 2 2.00 2.25 2.50 2.75 3.00 3.25 2 29(0) 19(0) 14(0) 46(1) 30(1) 22(1) 46(1) 30(1) 22(1) 46(1) 30(1) 22(1 46(1) 30(1) 22(1) 46(1) 30(1) 22(1) 46(1) 30(1) 22(1) 46(1) 30(1) 22(1) 46(1) 30(1) 22(1) 61(2) 30(1) 22(1) 61(2) 30(1) 22(1) 61(2) 30(1) 22(1) 61(2) 30(1) 22(1) 61(2) 30(1) 22(1) 76(3) 40(2) 22(1) 76(3) 40(2) 22(1) 89(4) 40(2) 22(1) 1166 40(2) 30(2) 179(11) 50(3) 30(2) 68(5) 37(3) ac 3.50 20 3.75 4.00 * 5.00 6.00 7.00 2 2 FIGURE 9.5 Statistical Sampling Results Evaluation Table for Tests of Controls: Achieved Upper Deviation Rate at 5 Percent Risk of Assessing Control Risk Too Low Actual Number of Deviations Found. 0 1 2 3 5 6 7 8 9 10 Sample Size 25 30 11.3 17.6 * 9.5 14.9 19.6 * * 24 * 35 40 8.3 7.3 12.9 17.0 11.4 15.0 10.2. 13.4 18.3 * * 45 16.4 19.2 * * 6.5 5.9 50 9.2 12.1 14.8 17.4 19.9 * 5.4 8.4 11.1 13.5 15.9 18.2 55 60 4.9 7.7 10.2 12.5 18.8 * 16.8 15.5 65 4.6 7.1 9.4 14.7 13.6 12.6 11.5 17.4 * 19.3 18.0 4.2 6.6 8.8 10.8 14.5 70 75 80 16.3 15.2 4.0 6.2 8.2 11.8 13.6 16.9 10.1 9.5 19.7 18.5 20.0 17.4 18.9 3.7 7.7 14.3 15.9 5.8 5.2 12.7 11.4 90 3.3 6.9 11.1 9.9 9.0 8.4 12.8 18.2. 14.2 12.8 3.0 4.7 6.2 7.6 11.5 16.4 100 125 10.3 8.3 2.4 3.8 6.1 7.2 9.3 10.3 15.5 16.8 14.0 15.2 11.3 12.3 9.5 10.3 7.2. 7.8 13.2 11.1 150 5.0 4.2 3.2 2.0 3.2 5.1 6.0 6.9 7.8 8.6 200 1.5 2.4 3.9 4.6 5.2 5.9 6.5 8.4 b. Determine the appropriate sample size and allowable number of deviations using Figure 9.4. items Sample size Allowable number of deviations 1 c. Use Figure 9.5 to determine the achieved upper deviation rate and the above table to determine the assessed level of control risk under the following circumstances. Assume that the sample size was 50 items. (Round your answers to 1 decimal place.) Circumstance No deviations were included in the sample. One deviation is included in the sample. Five deviations were included in the sample. Achieved Upper Assessed L Deviation Rate Control % Low % Low % Slightly below the max
