What is the tolerable rate of deviation? How does the audit team use it when deciding whether to rely on internal control?
Answer to relevant QuestionsDefine variables sampling. When is it used in the audit examination?What is the relationship between sample size and (a) Sampling risk, (b) Tolerable rate of deviation, and (c) Expected population deviation rate?In what steps of a sampling plan would the use of non-statistical sampling differ from the use of statistical sampling?Baily Cox, an audit manager, judged that the test of controls of the company’s 50,000 purchase transactions should be based on a tolerable rate of deviation of 6 percent, a risk of overreliance of 5 percent, and an ...Based on the information in the preceding question, the audit team determined that the allowance for sampling risk was a. 2.2%. b. 5.0%. c. 7.8%. d. 10.0%.
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