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 6 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	Tolerable Deviation Rate
Low	27%
Moderate	612%
Slightly below the maximum	1120%
Maximum	Over 20%

a. What is the planned assessed level of control risk?

multiple choice

• Low
• Moderate
• Slightly below the maximum
• Maximum

b. Determine the appropriate sample size and allowable number of deviations using figure 9.4

Sample size _______ items

Allowable number of deviation ________ ________

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 80 items. (Round your answers to 1 decimal place.)

Circumstances Achieved upper deviation Rate Assessed level of control risk

No deviation were included in the sample.

One deviation was included is the sample.

Eight deviations were included in the sample.