Indicate the Type of Sampling Risk Involved in Each of the Following

question 57

Short Answer

Indicate the type of sampling risk involved in each of the following situations.Use the following in your answer:
A. Risk of assessing control risk too high
B. Risk of assessing control risk too low
C. Risk of incorrect acceptance
D. Risk of incorrect rejection
N. No risk
___ 1. An auditor determined the adjusted sample rate of deviation to be higher than the tolerable rate of deviation. However, the rate of deviation in the population is less than the tolerable rate of deviation.
___ 2. While examining accounts payable, the sample results supported the auditor's conclusion that the accounts payable balance was correctly stated. However, the balance was materially misstated.
___ 3. An audit team used attributes sampling to evaluate a client's internal control policies regarding the physical security of inventory and determined they would need to reduce their planned reliance on internal controls. This decision is consistent with the results of evaluating the entire population.
___ 4. An auditor concluded that the upper limit on misstatement was less than the tolerable misstatement, but in reality the actual misstatement was greater than the tolerable misstatement.
___ 5. While performing an evaluation of internal controls, an auditor determined that internal controls were operating effectively. However, if the entire population had been evaluated, the auditor would have increased control risk.
___ 6. An auditor concluded that the inventory account balance was materially misstated based on the results of variables sampling. However, the balance was not materially misstated.

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Definitions:

Complex Solutions

Solutions to equations that include imaginary numbers, typically used when solving polynomial equations that do not have real-number solutions.

Real Solutions

The solutions of an equation that are real numbers, as opposed to imaginary or complex numbers.

Quadratic Equation

A mathematical equation where the highest power of an unknown variable is square.

Square Root Property

States that if x^2 = a, where a is a non-negative real number, then x = ±√a, identifying two possible solutions for x.