SOLVED

7) Which of the following is most correct when using audit sampling for exception rates? A) auditor is concerned with the lowest rate B) auditor is concerned with the highest rate C) auditor is concerned with the average on previous audits D) doesn’t impact the auditors decision 8) The highest estimated exception rate in the population at a particular acceptable risk of assessing control risk too low is: A) the upper exception rate. B) estimated population exception rate. C) the computed upper exception rate. D) the tolerable exception rate. 9) You are testing controls over accounts receivable and are determining if the appropriate credit authorization was made by an authorized person. Your sample size is 40 and your computed upper deviation rate is 5%. On the first 10 items sampled you have found 8 deviations. You would most likely: A) continue with the other 30 items. B) revisit the sample size calculations. C) increase the tolerable deviation rate. D) stop the test and re-set control risk for accounts receivable. 10) The exception rate that the auditor will permit in the population and still be willing to use the preliminary control risk assessment is called the: A) acceptable exception rate. B) estimated population exception rate. C) sample exception rate. D) tolerable exception rate. 11) The auditor’s best estimate of the population exception rate is the: A) current year’s sample exception rate. B) tolerable exception rate. C) prior year’s sample exception rate. D) computed upper exception rate. 12) Place the following steps in their proper order: 1.Analyze exceptions 2.Select the sample 3.Define attributes and exception conditions 4.State the objectives of the audit test 5.Specify the tolerable exception rate A) 1, 3, 2, 4, 5. B) 4, 3, 1, 2, 5. C) 4, 3, 5, 2, 1. D) 1, 2, 3, 4, 5. 13) If an auditor judgmentally selects a sample of one hundred items from a population and finds two exceptions, the auditor: A) can conclude that the sample exception rate is 2%. B) can conclude that the population exception rate is 2%. C) can calculate the highest exception rate expected in the population. D) cannot make any conclusions about either the sample or the population.