An Auditor Who Uses Statistical Sampling for Attributes in Testing

question 42

Multiple Choice

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the:

• A)Sample rate of deviation plus the allowance for sampling risk equals the tolerable rate of deviation.
• B)Sample rate of deviation is less than the expected rate of deviation used in planning the sample.
• C)Tolerable rate less the allowance for sampling risk exceeds the sample rate of deviation.
• D)Sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation.

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Definitions:

Inventory Management

The process of ordering, storing, and using a company's inventory, including the management of raw materials, components, and finished products.

Quick Response (QR)

A type of matrix barcode that can be scanned using a smartphone or QR code reader to provide access to information, such as websites or payment platforms.

Distribution Center

A facility that houses products for storage and redistribution to retailers, wholesalers, or directly to consumers, optimizing the supply chain.

Sales Forecasts

Predictions about future sales volumes based on historical data, market analysis, and other factors.