When the Auditor Has Assessed Control Risk of a Particular

question 85

Multiple Choice

When the auditor has assessed control risk of a particular area at a reduced level, he or she will then:

• A) eliminate the need to gather evidence in that area.
• B) test the effectiveness of the controls in that area.
• C) proceed to expand the sample sizes in that area.
• D) negotiate with management to determine which controls will be tested in that area.

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Definitions:

Confidence Interval

A spectrum of numbers, generated from analyzing sample data, expected to cover the value of a not yet identified population trait.

Hypothesis Test

A statistical method that uses sample data to evaluate a hypothesis about a population parameter, determining whether there is enough evidence to reject the null hypothesis.

Rejection Region

In hypothesis testing, the range of values for which the null hypothesis is considered unlikely and is therefore rejected.

Chi-Square Distribution

A statistical distribution that is used to determine the goodness of fit of an observed distribution to an expected one under the null hypothesis.