The Acceptable Risk of Assessing Control Risk Too Low (ARO)is

question 20

Multiple Choice

The acceptable risk of assessing control risk too low (ARO) is a measure of the level of risk that:

• A) is predicted by the statistical frequency table.
• B) the auditor is willing to take.
• C) is predicted by the random number table.
• D) is generated as a result of the auditor's knowledge of the true population deviation rate.

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Definitions:

Exponentially Smoothed

A data smoothing technique that gives recent observations more weight than older observations, often used in time series analysis.

Smoothing Constant

A parameter used in exponential smoothing methods that determines the level of smoothing applied to the data.

Seasonal Variation

Fluctuations in data or economic activity that occur regularly based on the season or time of year.

Time Series

It is a sequence of data points indexed in time order, often used to analyze and predict future events based on past trends.