Assume that your audit assistants also performed tests of controls on a sample of 200 purchases. During the tests they found that 16 purchases did not comply with the control procedures as laid down. This gave a sample deviation rate of 8%. After performing the tests, the audit assistant noted the following conclusion: 'The deviation rate of 8% is below the quantitative materiality level of 10% as outlined in the accounting standards. Therefore, controls over purchases can be relied on'. Critically evaluate the appropriateness of the assistant's evaluation of sampling results relating to the tests of controls on purchases.

Assume that your audit assistants also performed tests of controls on a sample of 200 purchases. During the tests they found that 16 purchases did not comply with the control procedures as laid down. This gave a sample deviation rate of 8%. After performing the tests, the audit assistant noted the following conclusion: 'The deviation rate of 8% is below the quantitative materiality level of 10% as outlined in the accounting standards. Therefore, controls over purchases can be relied on'. Critically evaluate the appropriateness of the assistant's evaluation of sampling results relating to the tests of controls on purchases.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter8: Specialized Audit Tools: Attributes Sampling, Monetary Unit Sampling, And Data Analytics Tools

Section: Chapter Questions

Problem 17RQSC

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