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

Question

Quizplus · Accepted Answer

When the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate of deviation, it indicates that the internal control is not operating effectively, which means the auditor should reduce the planned reliance on the control. This is because there is a higher risk of material misstatement, and the control cannot be considered reliable.

An Auditor Who Uses Statistical Sampling for Attributes in Testing