Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
11th Edition
ISBN: 9781337734493
Author: JOHNSTONE, Karla M; Gramling, Audrey A.; Rittenberg, Larry E.
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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