Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 5 MCQS, AUD514319, AUD514053, AUD514495, AUD511170 - Coggle Diagram
-
AUD514319
On evaluating results of a sample, the auditor decided not to rely on the controls being tested. Sample of 500 cash payments were tested for approvals. Auditor found that 35 payments lacked approvals. Auditor’s expected deviation rate was 8%. The tolerable deviation rate was estimated to be 9%. What could be the allowance for sampling risk.
If an auditor decided not to rely on control being tested, then the upper deviation limit should be more than tolerable deviation rate.
-
-
For auditor not to rely on controls, sum of sample deviation rate and allowance for sampling risk should be more than tolerable deviation rate (9%).
-
-
Thus, allowance for sampling risk should be more than 2%.
-
AUD514495
In determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized, an auditor should consider the tolerable rate of deviation from the control activity. The auditor should also consider the
In determining the sample size to test authorization of sales returns, the auditor should consider (a) Tolerable rate of deviations (b) Estimated deviation rate and (c) Allowable risk of assessing risk of material misstatement too low (Mnemonic: TEA). Thus, in the given options only the expected deviation rate will be considered. The allowable risk of assessing control risk too high will not be considered.
-
-
-