An auditor might conclude that the computed upper exception rate (CUER) for missing shipping documents is 4 percent at a 5 percent sampling risk, meaning the auditor concludes that the exception rate in the population is no greater than 5 percent with a 4 percent risk of the exception rate exceeding 5 percent.

Question

Quizplus · Accepted Answer

The statement incorrectly describes the relationship between the computed upper exception rate (CUER) and sampling risk. The CUER is the highest estimated exception rate in the population at a given confidence level (or sampling risk). If the CUER is 4 percent at a 5 percent sampling risk, it means the auditor concludes there is a 95 percent confidence that the exception rate in the population does not exceed 4 percent, not 5 percent.

An Auditor Might Conclude That the Computed Upper Exception Rate