Sampling for attributes is often used to allow an auditor to reach a conclusion concerning the rate of occurrence in a population. A common use in auditing is to test the rate of deviation from a prescribed control procedure in order to assess control risk.

Required:

1. When an auditor samples for attributes, identify the factors that should influence the auditor's judgment about the:

(a) acceptable risk of assessing control risk too low,

(b) tolerable deviation rate, and

(c) expected population deviation rate.

2. State the effect on sample size of an increase in each of the following factors, assuming all other factors are held constant:

(a) acceptable risk of assessing control risk too low,

(b) tolerable deviation rate, and

(c) expected population deviation rate.

3. Evaluate the sample results of a test for attributes if authorizations are found to be missing on seven check requests out of a sample of 100 tested. The population consists of 2,500 check requests, the tolerable deviation rate is 8 percent, and the acceptable risk of assessing control risk too low is, itself, low.