The following items concern determining exception rates using random sampling from large populations using attributes sampling. Select the best response.
a. The upper precision limit (CUER) in statistical sampling is
(1) the percentage of items in a sample that possess a particular attribute.
(2) the percentage of items in a population that possess a particular attribute.
(3) a statistical measure, at a specified confidence level, of the maximum rate of occur-
rence of an attribute.
(4) the maximum rate of exception that the auditor would be willing to accept in the
population without altering the planned reliance on the attribute.
b. What is an auditor’s evaluation of a statistical sample for attributes when a test of 50 documents results in two exceptions if the tolerable exception rate is 7 percent, the expected population exception rate is 5 percent, and the allowance for sampling risk is 2 percent?
(1) Modify the assessed level of control risk because the tolerable exception rate plus
the allowance for sampling risk exceeds the population exception rate.
(2) Accept the sample results as support for the assessed level of control risk because
the sample exception rate plus the allowance for sampling risk is less than the
tolerable exception rate.
(3) Accept the sample results as support for the assessed level of control risk because
the tolerable exception rate minus the allowance for sampling risk equals the ex-
pected population exception rate.
(4) Modify the assessed level of control risk because the sample exception rate plus the allowance for sampling risk exceeds the tolerable exception rate.
c. In addition to evaluating the frequency of deviations in tests of controls, an auditor
should also consider certain qualitative aspects of the deviations. The auditor most likely would give additional consideration to the implications of a deviation if it was
(1) the only deviation discovered in the sample.
(2) identical to a deviation discovered during the prior year’s audit.
(3) caused by an employee’s misunderstanding of instructions.
(4) initially concealed by a forged document.
