Based on a 5% Risk of Assessing Control Risk Too

question 34

Multiple Choice

Based on a 5% risk of assessing control risk too low, how would an auditor interpret a computed upper deviation rate of 7%?

• A)The auditor is willing to accept a deviation rate of 7% before deciding not to rely on the control.
• B)There is a 5% chance that the deviation rate in the population is less than 7%.
• C)There is a 5% chance that the deviation rate in the population exceeds 7%.
• D)There is a 95% chance that the deviation rate in the population equals 7%.

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Definitions:

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The process by which banks settle transactions made by cheques, transferring funds from the issuer's account to the payee's account.

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Checks issued by customers as a method of payment for goods or services received.

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Regular summaries provided to customers, detailing account activity, balances, and other financial information on a monthly basis.