An auditor who uses statistical sampling for attributes in testing internal controls is most likely to reduce the planned reliance on a prescribed control when the:
A)sample deviation rate plus the allowance for sampling risk equals the tolerable deviation rate.
B)sample deviation rate is less than the expected population deviation rate used in planning the sample.
C)tolerable deviation rate less the allowance for sampling risk exceeds the sample deviation rate.
D)sample deviation rate plus the allowance for sampling risk exceeds the tolerable deviation rate.

Question

Quizplus · Accepted Answer

When the sample deviation rate plus the allowance for sampling risk exceed the tolerable deviation rate, this indicates that the control is not operating effectively, leading the auditor to reduce planned reliance on the control. Tolerable deviation rate sets the maximum deviation rate that the auditor can accept, and sampling risk is a measure of the risk that the sample does not represent the population. A sample deviation rate that is less than the expected population deviation rate used in planning the sample might still be above the tolerable deviation rate, so this would not trigger a reduction in planned reliance on the control.

An Auditor Who Uses Statistical Sampling for Attributes in Testing