When evaluating the effectiveness of a client's internal controls with a tolerable rate of deviation of 5%,the audit team determined the upper limit rate of deviation to be 4%.Based on this information,which of the following decisions would the audit team most likely make?
A) Reduce the planned degree of reliance on internal controls.
B) Increase the extent of further audit procedures.
C) Rely on internal controls as planned.
D) Expand the sample to examine additional applications of the control.

Question

Quizplus · Accepted Answer

The upper limit rate of deviation of 4% is lower than the tolerable rate of deviation of 5%, indicating that the client's internal controls are effective. Therefore, the audit team can rely on the internal controls as planned and do not need to reduce reliance, increase further procedures, or expand the sample size.

When Evaluating the Effectiveness of a Client's Internal Controls with a Tolerable