You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which 3,000 were over $25,000. Jian Zhang. CPA, your supervisor, asked you to use a tolerable deviation rate of 6 percent (although she expects the rate to be only approximately 0.25 percent) and a 5 percent risk of assessing control risk too low. Use the following to determine the planned assessed level of control risk and the assessed level of control risk. Tolerable Deviation Rate 2-7% (Planned) Assessed Level of Control Risk Low Moderate Slightly below the maximum Maximum 6-12% 11-20% Over 20% a. What is the planned assessed level of control risk? Low O Moderate O slightly below the maximum O Maximum b. Determine the appropriate sample size and allowable number of deviations using Eigute 94 Sample size Allowable number of deviations items c. Use Eigure 9.5 to determine the achieved upper deviation rate and the above table to determine the assessed level of control risk under the following circumstances. Assume that the sample size was 80 items. (Round your answers to 1 decimal place.) Achieved Upper Deviation Rate Assessed Level of Control Risk Circumstance No devations were included in the sample One devation is included in the sample Eight deviations were induded in the sample You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which 3,000 were over $25,000. Jian Zhang. CPA, your supervisor, asked you to use a tolerable deviation rate of 6 percent (although she expects the rate to be only approximately 0.25 percent) and a 5 percent risk of assessing control risk too low. Use the following to determine the planned assessed level of control risk and the assessed level of control risk. Tolerable Deviation Rate 2-7% (Planned) Assessed Level of Control Risk Low Moderate Slightly below the maximum Maximum 6-12% 11-20% Over 20% a. What is the planned assessed level of control risk? Low O Moderate O slightly below the maximum O Maximum b. Determine the appropriate sample size and allowable number of deviations using Eigute 94 Sample size Allowable number of deviations items c. Use Eigure 9.5 to determine the achieved upper deviation rate and the above table to determine the assessed level of control risk under the following circumstances. Assume that the sample size was 80 items. (Round your answers to 1 decimal place.) Achieved Upper Deviation Rate Assessed Level of Control Risk Circumstance No devations were included in the sample One devation is included in the sample Eight deviations were induded in the sample
Expert Answer:
Related Book For
Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany
Posted Date:
Students also viewed these accounting questions
-
You have been asked to test the effectiveness of Ingo Corporations control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which...
-
You have been asked to investigate some cost problems in the Assembly Department of Ruthenium Electronics Co., a consumer electronics company. To begin your investigation, you have obtained the...
-
You have been asked to determine if two different production processes have different mean numbers of units produced per hour. Process 1 has a mean defined as 1 and process 2 has a mean defined as 2....
-
You want to conduct a study on commuters in NYC and how muchtime they spend traveling to and from work every day. You decide towait outside the subway stations from Monday to Friday, 9am to 5pm,and...
-
As the manager of a Papa Sean's restaurant, you must deal with a variety of business transactions. Give an example of a transaction that has each of the following effects on the accounting equation:...
-
If Van = 440 60° V in the network of Fig. 12.49, find the load phase currents IAB, IBC, and ICA. Three-phase, Y-connected generator z, 12 (+)phase b sequence 12 j9
-
If the Simplico mine is solved with all parameters remaining the same except that \(u=1.2\) is changed to \(u=1.3\), the value of the lease remains unchanged to within three decimal places. Indeed,...
-
Consider Wal-Mart, a large retailer. Classify the following items as an Asset (A), a Liability (L), or Stockholders Equity (S) for Wal-Mart: a . _____ Accounts payable b. _____ Common stock c. _____...
-
1. As a Marketing Manager with responsibility for staff, describe three (3) issues that you see as most likely to create boundary-spanning problems for employees in a customer call center at your...
-
Tonys Precision Computer Centre is picking up in business, so he has decided to expand his bookkeeping system to a general journal/ledger system. The balances from June have been forwarded to the...
-
1. a.What are procedural rules and ritualistic rules that govern family dynamics? Give an example of each. b.How might a crisis affect each? 2. What are the typical roles and rules that one might see...
-
What is the cash flow statement and what does it show? What is equity and how is it calculated? What is depreciation and how is it calculated?
-
Burnaby Builders Inc. is a community hardware store. BB ' s orders from Jamestown Fiberglass and Metal Inc. various building materials for its customers. BB ordered a recent supply of roofing...
-
A company is doing a campaign in a major market which includes several tactical costs. The agency is presenting the client a total budget including a mark-up of 33% agency profit. The costs are as...
-
1- distinguish the following three (3) product into medium to high involvement items: branded shoe(air jordon). international trip (going back to home country after year and half year leaving in...
-
For 2020, the social security tax rate was 6.2% (amount withheld) each for the employer and employee (12.4% total). The social security wage base limit was $137,700. The tax rate for Medicare was...
-
Discussion Questions: 1. Describe a recent interpersonal communication conversation/ exchange you had recently or in the past that was not very effective. Analyze the conversation. Did the other...
-
Periwinkle Company is a multinational organization. Its Parts Division is located in Lavender Land, while its Assembly Division is located in North Orchid. During the current year Periwinkle Companys...
-
When in the course of an audit might the auditor find it useful to apply analytical procedures?
-
You are working with William Bond, CPA, and you are considering the risk of material misstatement in planning the audit of Toxic Waste Disposal (TWD) Companys financial statements for the year ended...
-
Identify the 11 categories of the IIA's International Standards for the Professional Practice of Internal Auditing.
-
Example 11.3 introduces Klein's Model I. Use the data file klein to answer the following questions. a. Estimate the consumption function in equation (11.17) by OLS. Comment on the signs and...
-
Example 11.3 introduces Klein's Model I. Use the data file klein to answer the following questions. a. Estimate the investment function in equation (11.18) by OLS. Comment on the signs and...
-
Mike's Veneer Shop owns a vacuum press that requires annual maintenance. Mike has a contract to cover the maintenance expenses for the next 5 years. The contract calls for an annual payment of \(\$...
Study smarter with the SolutionInn App