Based on a 5% Risk of Assessing Control Risk Too

question 34

Multiple Choice

Based on a 5% risk of assessing control risk too low, how would an auditor interpret a computed upper deviation rate of 7%?

• A)The auditor is willing to accept a deviation rate of 7% before deciding not to rely on the control.
• B)There is a 5% chance that the deviation rate in the population is less than 7%.
• C)There is a 5% chance that the deviation rate in the population exceeds 7%.
• D)There is a 95% chance that the deviation rate in the population equals 7%.

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Definitions:

Strategic Planning

A methodical procedure for imagining a preferred future and converting this vision into general objectives and a series of actions to realize them.

Marketplace

An open environment for buying and selling goods, services, or ideas, either physically or online.

Ethical Stand

Represents a person's or organization's positioning on moral principles or issues, guiding their behavior and decisions.

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.