Question: 21. Assuming the tolerable deviation rate is 5 percent, the expected population rate is 3 percent, and the allowance for sampling risk is 2 percent,

21. Assuming the tolerable deviation rate is 5 percent, the expected

21. Assuming the tolerable deviation rate is 5 percent, the expected population rate is 3 percent, and the allowance for sampling risk is 2 percent, what should an auditor conclude if tests of 100 randomly selected documents reveals 4 deviations? a. Accept the sample results as support for assessing control risk below the maximum because the tolerable rate less the allowance for sampling risk equals the expected population deviation rate. b. Assess control risk at the maximum because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate. c. Assess control risk at the maximum because the tolerable rate plus the allowance for sampling risk exceeds the expected population deviation rate. d. Accept the sample results as support for assessing control risk below the maximum because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate. (AICPA ADAPTED)

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