When the SER Exceeds the TER, the Auditor Should Decide

question 34

True/False

When the SER exceeds the TER, the auditor should decide whether to increase sample size or to revise assessed control risk on the basis of cost versus benefit.

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Definitions:

Directly Related

A term indicating a direct connection or correlation between two elements, where changes in one directly affect the other.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire factory or plant, applied to allocate manufacturing overhead costs to products.

Support Department

Units within an organization that provide essential services or support to the production departments but do not directly engage in primary operations.

Service Departments

Units within a business not directly involved in primary operations but support other departments, e.g., HR and IT.