An Auditor Wants to Perform a Test of Controls for a Sensitive

question 106

Multiple Choice

An auditor wants to perform a test of controls for a sensitive control.If she discovers even one deviation,she will reject the control as unacceptable.She is especially concerned about finding a deviation rate of more than 1 percent.Using discovery sampling and the sample evaluation table for 5 percent risk of overreliance,what sample size should she use?

• A) 20.
• B) 150.
• C) 300.
• D) 500.

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Definitions:

FICA Tax

Federal Insurance Contributions Act tax, a U.S. tax that funds Social Security and Medicare, deducted from employees' paychecks and matched by employers.

Payroll Tax

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Federal Income Tax

A tax levied by the national government on an individual's or corporation's annual income.

Loss Contingencies

Potential losses that a company might incur if a certain event occurs, recognized in financial statements if the loss is probable and the amount can be reasonably estimated.