Sample Results Evaluation. Jamie Plane is testing the effectiveness of an important controlfor Blackheart Inc. Plane is placing a high level of reliance on this control and has assesseda relatively low risk of overreliance (5 percent) and tolerable rate of deviation (6 percent).Based on the acceptable risk of overreliance, expected population deviation rate, and tolerable rate of deviation, Plane determined a sample size of 60 items. The tests of controlsrevealed three deviations.Required:a. Calculate the sample rate of deviation.b. Using AICPA sample evaluation tables, calculate the ULRD and allowance for samplingrisk.c. Why does the ULRD differ from the sample rate of deviation?d. What would Plane’s conclusion be with respect to the operating effectiveness of the control? What options are available at this time?e. Ignoring the effects on sample size, how would Plane’s decision to accept a higher riskof overreliance (10 percent) affect the conclusions made with respect to the operatingeffectiveness of the control?
Sample Results Evaluation. Jamie Plane is testing the effectiveness of an important control
for Blackheart Inc. Plane is placing a high level of reliance on this control and has assessed
a relatively low risk of overreliance (5 percent) and tolerable rate of deviation (6 percent).
Based on the acceptable risk of overreliance, expected population deviation rate, and tolerable rate of deviation, Plane determined a sample size of 60 items. The tests of controls
revealed three deviations.
Required:
a. Calculate the sample rate of deviation.
b. Using AICPA sample evaluation tables, calculate the ULRD and allowance for sampling
risk.
c. Why does the ULRD differ from the sample rate of deviation?
d. What would Plane’s conclusion be with respect to the operating effectiveness of the control? What options are available at this time?
e. Ignoring the effects on sample size, how would Plane’s decision to accept a higher risk
of overreliance (10 percent) affect the conclusions made with respect to the operating
effectiveness of the control?
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