In Order for the Auditor to Decide to Perform Tests

question 81

Multiple Choice

In order for the auditor to decide to perform tests of controls,which of the following relationships should exist?

• A) The sampling risk should be less than 5 percent.
• B) The tolerable rate of deviation should exceed the expected population deviation rate.
• C) The expected population deviation rate should exceed the risk of overreliance.
• D) The expected population deviation rate should exceed the tolerable rate of deviation.

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Definitions:

Financial Instrument

A security or financial asset.

Indefinite Future

A future period that is not defined or limited in time, often associated with planning or forecasting under conditions of uncertainty.

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A type of annuity that pays a fixed amount of money indefinitely, with no end date.

Interest Rates

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal.