An Auditor Wanted to Test Credit Approval on 10,000 Sales

question 55

Multiple Choice

An auditor wanted to test credit approval on 10,000 sales invoices processed during the year.The auditor designed a statistical sample that would provide a 1% risk of overreliance (99% confidence) that not more than 7% of the sales invoices lacked approval.The auditor estimated from previous experience that about 2½% of the sales invoices lacked approval.A sample of 200 invoices was examined,and 7 of them were lacking approval.The auditor then determined the upper limit rate of deviation to be 8%. The allowance for sampling risk was

• A) 5½%.
• B) 4½%.
• C) 3½%.
• D) 1%.

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Definitions:

Professional Standards

Established norms and criteria in a given profession that guide ethical and effective practice.

Never Events

Serious, preventable patient safety incidents that should never happen in healthcare settings, such as surgery on the wrong site.

Skilled Nursing

A high level of medical care that is provided by trained individuals, such as registered nurses, to patients with serious illnesses or conditions.

Extensive Wound Care

A comprehensive approach to treating serious wounds that involves cleaning, protecting, and potentially surgical intervention to promote healing.