An auditor who uses statistical sampling for attributes in testing internal controls is most likely to reduce the planned reliance on a prescribed control when the
A) Sample deviation rate plus the allowance for sampling risk equals the tolerable deviation rate.
B) Sample deviation rate is less than the expected population deviation rate used in planning the sample.
C) Tolerable deviation rate less the allowance for sampling risk exceeds the sample deviation rate.
D) Sample deviation rate plus the allowance for sampling risk exceeds the tolerable deviation rate.

Question

Quizplus · Accepted Answer

If the sample deviation rate plus the allowance for sampling risk exceeds the tolerable deviation rate, then the auditor cannot have sufficient confidence in the internal control and must reduce the planned reliance on it. This is because the actual population deviation rate could exceed the tolerable deviation rate, which would mean that the control is not operating effectively. Therefore, the auditor would need to consider other procedures to achieve the desired level of control assurance.

An Auditor Who Uses Statistical Sampling for Attributes in Testing