If Auditors Conducting Attribute Sampling Found That the Client Deviated

question 58

Multiple Choice

If auditors conducting attribute sampling found that the client deviated from a prescribed control in six of the first 10 items examined, the auditor is most likely to:

• A) increase the computed upper deviation rate.
• B) increase sample size.
• C) stop the test and increase control risk.
• D) decrease the tolerable deviation rate.

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Definitions:

March Put

An options contract which grants the holder the right to sell a specific financial instrument at a predetermined price before or at a specified date in March.

Underlying Stock

Refers to the specific security or asset on which a derivative instrument, such as an option or future, is based.

March 30 Call Option

A financial derivative that gives the holder the right, but not the obligation, to buy an asset at a specified price on or before March 30.

Intrinsic Value

The actual, fundamental value of an asset, investment, or company, based on underlying perception of its true value including all aspects of the business.