AUDITING RMU
11th Edition
ISBN: 9781260934830
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 8, Problem 8.16MCQ
To determine
Introduction:
Tolerable Rate is defined as the maximum rate of acceptability of misstatement. It’s the largest variance accepted in audit sampling in order to rely upon a specific control.
Upper Deviation Rate is defined as sample deviation rate and an appropriate allowance for sampling risks.
To describe: Planned Allowance for Sampling Risk
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Students have asked these similar questions
An auditor desired to test credit approval on 10,000 sales invoices processed during the year.
The auditor designed a statistical sample that would provide 1 percent risk of assessing control
risk too low for the assertion that not more than percent of the sales invoices lacked approval.
The auditor estimated from previous experience that about 22 percent of the sales invoices
lacked approval. A sample of 200 Invoices was examined, and 7 of them were lacking approval.
The auditor then determined the computed upper deviation rate to be 8 percent.
In the evaluation of this sample, the auditor decided to increase the level of the preliminary
assessment of control risk because the:
Multiple Choice
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expected population deviation rate (7 percent) was more than the
percentage of errors in the sample (3½ percent).
expected population deviation rate (2½ percent) was less than the
tolerable deviation rate (7 percent).
tolerable deviation rate (7 percent) was less than the computed upper…
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The auditor conducted test of details of transaction and audit client's revenue using sampling. There are 100 sales transactions made by the company. Overall of the 100 transactions, according to auditor’s professional judgment, materiality is set at 5% or 5 transactions. The auditor took a sample of 20 transactions, and it turns out that of the 20 transactions examined, there were 2 misstatement found. Based on the results of the sampling inspection, the auditor concluded that there was 2 out of 20 means 10%, and judge this finding as material misstatement. When in fact, overall of the 100 transactions there were only that 2 transactions occurred irregularities or errors that accidentally that two were chosen on 20 random sampling. What we called the risk involved in this case example? Explain your answer specifically!
Chapter 8 Solutions
AUDITING RMU
Ch. 8 - Prob. 8.1RQCh. 8 - Prob. 8.2RQCh. 8 - Prob. 8.3RQCh. 8 - Prob. 8.4RQCh. 8 - Prob. 8.5RQCh. 8 - Prob. 8.6RQCh. 8 - Prob. 8.7RQCh. 8 - Prob. 8.8RQCh. 8 - Prob. 8.9RQCh. 8 - Prob. 8.10RQ
Ch. 8 - Prob. 8.11MCQCh. 8 - Prob. 8.12MCQCh. 8 - Prob. 8.13MCQCh. 8 - Prob. 8.14MCQCh. 8 - Prob. 8.15MCQCh. 8 - Prob. 8.16MCQCh. 8 - Prob. 8.17MCQCh. 8 - Prob. 8.18MCQCh. 8 - Prob. 8.19MCQCh. 8 - Prob. 8.20MCQCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.22PCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.25PCh. 8 - Prob. 8.26PCh. 8 - Prob. 8.27PCh. 8 - Prob. 8.28PCh. 8 - Prob. 8.29PCh. 8 - Prob. 8.30PCh. 8 - Prob. 8.31P
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