The Audit Team Is Planning to Examine a Sample of Control

question 68

Multiple Choice

The audit team is planning to examine a sample of control policies and procedures.Assume that,based on the intended degree of reliance on internal control,the audit team wishes to control the risk of overreliance to 5% and,based on past audits,estimates the expected population deviation rate to be 2%.Initially,the audit team was planning for a moderate degree of reliance on internal control and established a tolerable rate of deviation of 7%; however,it is considering increasing its reliance on internal control and reducing the tolerable rate of deviation to 4%.Which of the following is not true with respect to the impact of the reduction in the tolerable rate of deviation on sample size?

• A)The reduction in the tolerable rate of deviation would result in a smaller sample size.
• B)The audit team would likely not seek a reduction in the tolerable rate of deviation unless it could obtain a reduction in its substantive testing.
• C)The resultant sample size assuming the reduction in the tolerable rate of deviation would be 294 items.
• D)The reduction in the tolerable rate of deviation would result in the audit team examining an additional 206 items.

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Definitions:

Conscientiousness

A personality trait characterized by thoroughness, carefulness, and the desire to do a task well, often associated with high levels of organization and dependability.

Neuroticism

A personality trait characterized by anxiety, fear, moodiness, worry, envy, frustration, jealousy, and loneliness.

Self-Realization

The process of fully understanding and fulfilling one's own potential or true self.

Psychological Well-Being

This encompasses aspects of personal development, self-acceptance, autonomy, and the ability to manage life effectively, contributing to an individual's overall mental health.