As a Result of Tests of Controls,an Auditor Assessed Control

question 69

Multiple Choice

As a result of tests of controls,an auditor assessed control risk too low and decreased the effectiveness of her substantive procedures.This assessment occurred because the true deviation rate in the population was:

• A)Less than the risk of overreliance,based on the auditor's sample.
• B)Less than the deviation rate in the auditor's sample.
• C)Greater than the risk of overreliance,based on the auditor's sample.
• D)Greater than the deviation rate in the auditor's sample.

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Compounded Monthly

A method of calculating interest where the interest earned is added to the principal, and the total becomes the basis for calculation in the subsequent month.

Insurance Settlement

The amount paid by an insurance company to a policyholder or claimant as compensation for a covered loss.

Lump Sum

A single payment made at a particular time, as opposed to a series of smaller payments or installments.