In testing controls over invoices,an auditor discovers that in 10% of her statistical sample invoices were for amounts greater than the actual quantity shipped.In such a case,an appropriate response for her would be to __________.
A)increase her sample size to determine the extent of the control weakness
B)recalculate control risk to determine if there is any effect on the nature,timing,or extent of her year-end procedures
C)conclude that controls are working at 90% effectiveness and classify control risk as low
D)consult with her partner to consider launching a fraud investigation

Question

Quizplus · Accepted Answer

10% of the statistical sample having invoices for amounts greater than the actual quantity shipped indicates a potential control weakness. Increasing the sample size will help the auditor determine the extent of the control weakness and whether this is a pervasive issue or a one-time occurrence. This will help the auditor in determining the further course of action. Recalculating control risk or concluding that controls work at 90% effectiveness may not be appropriate until the extent of the control weakness is known. A fraud investigation may be considered later, but increasing the sample size is the initial appropriate response.

In Testing Controls Over Invoices,an Auditor Discovers That in 10