Simulation $9-41[$LO $9-6]$

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 $5$ percent $($although she expects the rate to be only approximately $0\mathrm{.}50$ 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

$($Planned$)$ Assessed Level of Control Risk

Rate

Low

$2-7\%$

Moderate

$6-12\%$

Slightly below the maximum $11-20\%$

Question B ONnnly

b$.$ Determine the appropriate sample size and allowable number of deviations using Figure $9\mathrm{.}4.$