If an Auditor Is Evaluating a Sample for a Test

question 42

Multiple Choice

If an auditor is evaluating a sample for a test of controls of 50 items and specifies a risk of assessing control risk too low of 10 per cent and finds two deviations, the approximate maximum deviation rate (rounded to the nearest one per cent) is: (Use the following table to determine your answer.)
Number of factors for sampling risks of:

• A) 10 per cent.
• B) six per cent.
• C) 11 per cent.
• D) four per cent.

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Definitions:

Central Bank

The primary financial institution of a country, responsible for regulating the money supply, issuing currency, and managing the nation's monetary policy.

Reserves

Reserves are funds or materials set aside or saved for future use or to cover unexpected emergencies, often used in financial, resource, or energy sectors.

Equilibrium Exchange Rate

The exchange rate at which the demand for a currency is exactly equal to its supply in the foreign exchange market.

Purchasing Power Parity Theory

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine relative currency values.