a. Based on Jackson’s 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 93, round down and use a sample size of 90.) 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 Mo’s internal control?
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
a risk of overreliance of 5 percent). After properly selecting the 93 items, Jackson found no
deviations from the prescribed control activities.
Required:
a. Based on Jackson’s 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 93, round
down and use a sample size of 90.)
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 Mo’s
internal control?
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