You are auditing price controls over accounts receivable for Becker Construction Co.The control being tested requires that the client use only the approved price list when valuing sales invoices. For each test item in the sample, the auditor will compare the price on the invoice with the approved price according to the authorized price list.

Risk of assessing control risk too low (Sampling Risk) is set at 5%. The client's book value is $9,325,000 and there are over 8,000 active subsidiary balances.Materiality is set at $215,000.Prior audits have shown that this control test should use an expected population deviation rate of 1% and a tolerable error (deviation) rate of 5%.

1.What population are we testing?

2.What is the attribute for this test?

3.What is the sample size?

4.If there are 3 errors in the sample, what is the achieved upper error (deviation) limit (rate)?

What is the allowance for sampling risk? (This question was not asked on video but she showed how to calculate the sample deviation rate and along with the upper deviation rate, you should be able to calculate the allowance)

5.What do we conclude about the operation of this internal control?