In determining the sample size for a test of controls, an auditor should consider the likely rate of deviations, desired confidence level and the:
A) tolerable deviation rate.
B) risk of incorrect acceptance.
C) nature and cause of deviations.
D) population size.

Question

Quizplus · Accepted Answer

The tolerable deviation rate is an important factor in determining the sample size for a test of controls because it represents the maximum rate of deviation from the prescribed control procedures that the auditor is willing to accept without concluding that the control is not effective. The auditor's sample size will increase as the tolerable deviation rate decreases, since a lower rate of allowed deviation requires more confidence in the effectiveness of the control. The other choices, risk of incorrect acceptance, nature and cause of deviations, and population size, are also important factors to consider in designing a test of controls, but they are not as closely linked to the determination of sample size as the tolerable deviation rate.

In Determining the Sample Size for a Test of Controls