A PA Recently Finished the Audit of a Family-Owned Business

question 4

Multiple Choice

A PA recently finished the audit of a family-owned business. Now she is working on a large client with about 50 times the assets and 30 times total revenue. For the larger client, the PA will likely have

• A) no changes to the audit risk model.
• B) higher control risk.
• C) higher audit risk.
• D) lower audit risk.

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Definitions:

Population standard deviation

A measure of the dispersion or variability within a total population.

Sample median

The midpoint value of a sample data set, where half the numbers are above the median and half are below.

Confidence interval

An extent of values, obtained via sample statistical analysis, seen as likely embracing the unknown value of a population attribute.

Random sample

A subset of individuals chosen from a larger set where each member has an equal chance of being selected.