Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 8, Problem 15RQSC
To determine

Introduction:Sample size is the small unit of the audit set by the auditor to detect or control the risk before auditing. Deviation rate is the maximum allowable limit of the risk.

Comment on the result and give the reason for taking upper limit of deviation greater than zero.

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For each term in the first column below, identify its definition (or partial definition). Each definition may be used once or not at all. # 1 2 3 4 5 6 7 8 9 Definition (or Partial Definition) A defined rate of departure from prescribed controls. Also referred to as occurrence rate or exception rate. A sampling plan for locating at least 1 deviation, providing that the deviation occurs in the population with a specified frequency. Also referred to as precision, a measure of the difference between a sample estimate (projection) and the tolerable rate of deviation or tolerable misstatement at a specified sampling risk. An estimate of the most likely amount of monetary misstatement in a population. The complement of the risk of incorrect acceptance. The maximum population rate of deviations from a prescribed control that the auditors will accept without modifying the planned assessment of control risk. The possibility that the assessed level of control risk based on the sample is less…
When using sampling in the study of internal control, the audit team would compare theupper limit rate of deviation to thea. Expected population deviation rate.b. Sample rate of deviation.c. Statistical rate of deviation.d. Tolerable rate of deviation
Which of the following steps involved with determining the upper limit on misstatements is ordinarily performed earliest?a. Multiply the sampling interval by the tainting percentage.b. Determine the audited value of the item and compare it to the recorded balance.c. Calculate the basic allowance for sampling risk.d. Calculate the incremental allowance for sampling risk.

Chapter 8 Solutions

Auditing: A Risk Based-Approach (MindTap Course List)

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