Bundle: Auditing: A Risk Based-approach, 11th + Mindtap Accounting, 1 Term (6 Months) Printed Access Card
Bundle: Auditing: A Risk Based-approach, 11th + Mindtap Accounting, 1 Term (6 Months) Printed Access Card
11th Edition
ISBN: 9781337734455
Author: Karla M Johnstone-zehms, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 8, Problem 19CYBK

Refer to Exhibit 8.6. Assume a 5% risk of overreliance,a tolerable deviation rate of 8%, a sample size of 100, and that the number of deviations is five. What is the upper limit of the possible deviation rate, and what does it mean?

a. 10.3%. The auditor is 95% confident that the real error rate in the population is no greater than 10.3%.
b. 10.3%. The auditor is 95% confident that the real error rate in the population is no greater than 5%.
c. 5%. The auditor is 92% confident that the real error rate in the population is no greater than 10.3%.
d. 5%. The auditor is 92% confident that the real error rate in the population is no greater than 5%.

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Assume that Dylan Lee found two deviations in a sample of 90 transactions. Using AICPAsample evaluation tables, Lee determined that the ULRD at a 5 percent risk of overrelianceisa. 2.0 percent.b. 2.2 percent.c. 5.9 percent.d. 6.9 percent
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