If an Auditor Calculated an Upper Limit Rate of Deviation

question 65

Multiple Choice

If an auditor calculated an upper limit rate of deviation of 5 percent when the tolerable rate of deviation was 4 percent,the auditor would conclude that

• A) The population deviation rate is low enough to rely on internal control as planned.
• B) The population deviation rate may be higher than that necessary to rely on internal control as planned.
• C) The control risk can be assessed at planned levels.
• D) The control risk should be assessed at lower levels.

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Definitions:

Paradigm Shift

A fundamental change in the basic concepts and experimental practices of a scientific discipline or other professional practice.

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Scientific Method

A systematic methodology for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge based on empirical or measurable evidence subject to specific principles of reasoning.

Statistics

The science of collecting, analyzing, interpreting, and presenting empirical data to make informed decisions and predict outcomes.