The following are situations that illustrate tests of controls performed as a part of an attributes sampling application. Match each description of a situations with the related terms. Each term is associated with only one description.
1. Based on a random sample, Fitzmaurice, CPA, found that the tolerable rate of deviation was less than the upper limit rate of deviation and assessed control risk at the maximum. Unknown to Fitzmaurice, the true deviation rate in the population was less than the tolerable rate of deviation | Risk of underreliance | ____ |
2. Alison, CPA, required the control that all sales invoices be supported by a bona fide shipping document to be functioning very effectively because of the importance of this control | Upper limit rate of deviation | ____ |
3. Jones, CPA, found four deviations from prescribed control procedures in the sample of 100 sales invoices | Expected population deviation rate | ____ |
4. Based on a random sample, Kelly, CPA, found that the upper limit rate of deviation was less than the tolerable rate of deviation and assessed control risk as moderate as originally planned. Unknown to Kelly, the true deviation rate in the population was more than the tolerable rate of deviation | Sample rate of deviation | ____ |
5. Based on experience with the client and industry, Herbert, CPA, estimated that a 3% deviation rate exists in the client’s credit approval of sales invoices this year | Risk of overreliance | ____ |
6. Grayson, CPA, calculated the statistical estimate of the population deviation rate as the sum of the sample rate of deviation and sampling risk | Tolerable rate of deviation | ____ |
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