Based on a 5% risk of assessing control risk too low, how would an auditor interpret a computed upper deviation rate of 7%?
A)The auditor is willing to accept a deviation rate of 7% before deciding not to rely on the control.
B)There is a 5% chance that the deviation rate in the population is less than 7%.
C)There is a 5% chance that the deviation rate in the population exceeds 7%.
D)There is a 95% chance that the deviation rate in the population equals 7%.

Question

Quizplus · Accepted Answer

Based on a 5% risk of assessing control risk too low, the auditor is willing to accept a deviation rate of 5% or lower. Since the computed upper deviation rate is 7%, there is a 5% chance that the population deviation rate actually exceeds 7%. Therefore, the auditor cannot rely on the control as it indicates control risk is higher than initially specified.

Based on a 5% Risk of Assessing Control Risk Too