Use the infor to answer 26. And 27.

An auditor desired to test credit approval on 10,000 sales order processed during auditor designed a statistical sample that would provide 1% risk of assessing control (99% confidence) that not more than 7% of the sales order lacked approval. The estimate from previous experience that about 2^1/2% of the sales order lacked a sample of 200 invoice was examined and 7 of them were lacking approval. The determined the upper deviation limit to be 8%.

26. in the evaluation of this sample, the auditor decided to increase the levl of control risk because the

A. tolerable rate (7%) was less than the achived upper deviation limit (8%).

B. expected deviation rate (7%) was more than the percentage of error is

C. expected deviation rate (2^1/2%) was less than the tolerable rate (7%)

D. achived upper precisiom limit (8%) was more than the percentage of (3^1/2%)

27. the allowance for sampling risk was

A. 5^{1/2 %}

b. 4^1/2%

C. 3^1/2%

D 1%

28. several risks are inherent in evaluation of audit evidence that has the use of statistical sampking. An example of a beta or type II error failure to

A. properly define the population to be sampled.

B. draw a random sample form the population.

C. Accepting that a book value is materially misstated when the type II materially misstated.

D. Accepting that a book value is not materially misstated when the type II materially misstated.

29. Which of the following factor does an auditor usually need to control particular audit sample for a test of controls?

a. variation in the population

b. total dollar amount of the items to be sampled.

c. Acceptable level of risk of assessing control risk

d. tolerable misstatement.

30. A principle advantage of statistical method over nonstatistic scientific basis for determining

a. Sample size

b. Tolerable misstatement

c. Expected amount of misstatement

d. Inherent risk

31. The risk that evidence obtain from a sample is not evaluated properly by the auditor is known as

a. nonsampling risk

b. alpha risk

C. beta risk

D. sampling risk