The appropriate assumption to make regarding the overall percent of error in those population items containing an error is:
A) set after a quantitative analysis of client's internal control system.
B) based on statistical analysis using confidence limits.
C) determined using random number tables.
D) based on the auditor's personal judgement in the circumstances.

Question

Quizplus · Accepted Answer

The appropriate assumption regarding the overall percent of error in population items containing an error is often based on the auditor's personal judgment in the circumstances. This judgment takes into account the auditor's understanding of the entity, its environment, and its internal control system, as well as the auditor's professional experience and insights into similar audits. While statistical analysis, random number tables, and an analysis of the client's internal control system can inform this judgment, the final assumption about the error rate is ultimately a matter of professional judgment.

The Appropriate Assumption to Make Regarding the Overall Percent of Error