As a result of sampling procedures applied as tests of controls, an auditor incorrectly assesses control risk lower than appropriate. The most likely Explanation: for this situation is that:

Question

Quizplus · Accepted Answer

Choice "C," is correct. T,he situation given is an example of sampling risk, or the probability that the sample chosen is not representative of the population as a whole. T,his is illustrated by the fact that the sample deviation rate is less than the tolerable rate, but the true deviation rate exceeds the tolerable rate. C,hoice "A," is incorrect. I,f both the deviation rates of the sample and the population exceed the tolerable rate, the auditor would assess control risk at the appropriate level. C,hoice "B," is incorrect. I,f both the deviation rates of the sample and the population are less than the tolerable rate, the auditor would assess control risk at the appropriate level. C,hoice "D," is incorrect. I,f the sample deviation rate exceeds the tolerable rate, but the deviation rate in the population does not, this would also result in sampling risk. I,n this case, however, the auditor would assess control risk at a level higher than appropriate.

As a Result of Sampling Procedures Applied as Tests of Controls