^{_{You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all purchases over $25,000. During the year, lngo 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 4 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 10 determine the planned assessed level of control risk and the assessed level of control risk.}}

^{_{(Planned) Assessed Level of Control Risk Tolerable Deviation Rate}}

^{_{Low 2-7%}}

^{_{Moderate 6-12%}}

^{_{Slightly below the maximum 11-20%}}

^{_{Maximum Over 20%}}

^{_{For all parts of this question select the proper reply from below.}}

^{_{a. What is the planned assessed level of control risk?}}

^{_{b. Determine the appropriate sample size and allowable number of deviations using Figure 9.4.}}

^{_{For parts cl through, c6 assume that the sample size was 100 items. Use Figure 9.5 to determine the achieved upper deviation ratre and the above table to determine the assessed level of control risk under the following circumstances.}}

^{_{Circumstance Achieved Upper Deviation Rate Assessed Level of Control Risk}}

^{_{No deviations were included in the sample. c1 c4}}

^{_{One deviation is included in the sample. c2 c5}}

^{_{Eight deviations were included in the sample c3 c6}}

^_Replies

^{_{Planned and Assessed Level Sample Size Achieved Upper of Control Risk}}

^{_{of Control Risk (Questions a, c4, c5, c6} (Question b) (Questions c1, c2, c3}}}

1. Low	5. 74 items.	10.	0.00%
2. Moderate	6. 93 items.	11.	2.00%
3. Slightly below the maximum.	7. 117 items.	12.	2.52%
4. Maximum.	8. 119 items	13.	3.00%.
	9. 236 items.	14.	3.99%
		15	4.70%
		16.	6.20%
		17.	12.13%
		18.	14.00%
		19.	18.00%