Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sample Results Evaluation. Kendall Jackson, CPA, is examining the operating effectiveness of the internal control of Town Mo , a large conglomerate in the music
Sample Results Evaluation. Kendall Jackson, CPA, is examining the operating effectiveness of the internal control of Town Mo a large conglomerate in the music industry. As part of the evaluation, Jackson determined a necessary sample size of items based on a tolerable rate of deviation of percent, an expected population deviation rate of percent, and a risk of overreliance of percent After properly selecting the items, Jackson found no deviations from the prescribed control activities.
Required:
a Based on Jacksons sample, determine the sample rate of deviation and ULRD. Because the AICPA sample evaluation tables do not contain a row for a sample size of round down and use a sample size of
b Explain the difference between the ULRD and the sample rate of deviation observed in part a How does this difference relate to the use of statistical sampling?
c What would Jackson conclude with respect to the operating effectiveness of Town Mos internal control?
d If Jackson found three deviations in the sample, calculate the sample rate of deviation and use AICPA sample evaluation tables to determine the ULRD. What would Jackson conclude with respect to the operating effectiveness of Town Mos internal control in this case?
e Using AICPA sample evaluation tables, determine the maximum number of deviations that Jackson could identify without reducing the reliance on Town Mos internal control.
f Repeat part e using a percent risk of overreliance. What is the explanation for any differences between this number of deviations and that in part e
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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