You have been asked to test the effectiveness of Ingo Corporations 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, CIA, your supervisor, has 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 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	2-7%
Moderate	6-12%
Slightly below the maximum	11-20%
Maximum	Over 20%

a.	What is the planned assessed level of control risk?
	Low Moderate Slightly below the maximum Maximum

b.	Determine the appropriate sample size using ACL.

c.	Use ACL 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 your sample size was 119 items. (Round your answers to 2 decimal places.)

Transcribed image text