Question   Sample Results Evaluation. 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 sample size of 93 items (based on a tolerable rate of deviation of 5 percent, an expected population deviation rate of 0.5 percent, and a risk of overreliance of 5 percent). After properly selecting the 93 items, Jackson found no deviations from the prescribed control activities. a. If Jackson found three deviations in the sample, calculate the sample rate of deviation and use AICPA sample evaluation tables to determine the ULRD. What would Jackson conclude with respect to the operating effectiveness of Town Mo’s internal control in this case? b. Using AICPA sample evaluation tables, determine the maximum number of deviations that Jackson could identify without reducing the reliance on Town Mo’s internal control. c. Repeat part (e) using a 10 percent risk of overreliance. What is the explanation for any differences between this number of deviations and that in part (e)?

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question
Question
 

Sample Results Evaluation. 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 sample size of 93 items (based on a tolerable rate of deviation of 5 percent, an expected population deviation rate of 0.5 percent, and
a risk of overreliance of 5 percent). After properly selecting the 93 items, Jackson found no
deviations from the prescribed control activities.

a. If Jackson found three deviations in the sample, calculate the sample rate of deviation
and use AICPA sample evaluation tables to determine the ULRD. What would Jackson
conclude with respect to the operating effectiveness of Town Mo’s internal control in this
case?
b. Using AICPA sample evaluation tables, determine the maximum number of deviations
that Jackson could identify without reducing the reliance on Town Mo’s internal control.
c. Repeat part (e) using a 10 percent risk of overreliance. What is the explanation for any
differences between this number of deviations and that in part (e)?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Statistical Power and Errors
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman