An audit team designed a sample that would provide a 10 percent risk of overreliance that not more than 7 percent of sales invoices lacked credit approval.From previous audits,the audit team expected that 3 percent of the sample invoices lacked proper approval.From the sample of 90 invoices,7 were found to lack credit approval.Using AICPA sample evaluation tables,the upper limit rate of deviation was
A) 3.3%.
B) 4.5%.
C) 7.8%.
D) 12.8%.

Question

Quizplus · Accepted Answer

The upper limit rate of deviation is calculated using the AICPA sample evaluation tables, which consider the sample size, number of deviations, and the risk of overreliance. With 7 deviations in a sample of 90 and a 10% risk of overreliance, the upper limit rate of deviation is 12.8%.

An Audit Team Designed a Sample That Would Provide a 10