Question

In: Accounting

Which of the following statements is true of the tolerable rate of deviation? a. It is...

Which of the following statements is true of the tolerable rate of deviation?

a. It is a rate of deviation set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the rate of deviation set is not exceeded by the actual rate of deviation in the population.
b. This term is sometimes referred to as the tolerable failure rate.
c. The auditor's tolerable rate of deviation is the level at which the control's failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor's planned assessment of control risk in performing tests of account balances.

d. All of these statements are true.

An example of an attribute of interest to an auditor would be evidence that the client has matched vendor invoice details with the purchase order and receiving report before payment approval and noted that they match before authorizing a payment for the goods received.

a. True
b. False

One example of the circumstances in which the auditor might use MUS includes accounts receivable confirmations when credit balances are not significant.

a. True
b. False

When the total estimated misstatement exceeds the tolerable misstatement, the auditor has available several possible courses of action. Two of the options are expanding the sample or changing the audit objective to estimating the correct value.

a. True
b. False

Which statement is false regarding the use of sampling and data analytics tools by auditors?

a. Auditors use sampling in testing account balances and assertions.
b. Sampling involves looking at all of the transactions that occurred during the period under audit.
c. Auditors use sampling in testing controls.
d. Sampling techniques would be appropriate when an auditor wants to perform procedures such as examining documents, reperforming calculations, or sending confirmations.

Solutions

Expert Solution

Answer for 1: Option A - It is a rate of deviation set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the rate of deviation set is not exceeded by the actual rate of deviation in the population.

Explanation: It is the rate set by the Auditor upto which if the control fails, the auditor takes an assurance that the control operated effectively during the audit period. For example, if the tolerable rate is 5%, and if the control failure occured for upto 5% as per his testing, then the auditor will conclude the control as pass.

Answer for 2: Option A - True

Explanation: This is a basic test that the auditors implement to ensure that the payment to the vendor is not released in excess of the value of goods received against the purchase order.

Answer for 3: Option A - True

Explanation: Auditors use the Monetary unit sampling (MUS) method for getting the balance confirmations for accounts receivables.

Answer for 4: Option A - True

Explanation: the auditor employs additional tests if the errors exceed the tolerable rate of deviation.

Answer for 5: Option D -  Sampling techniques would be appropriate when an auditor wants to perform procedures such as examining documents, reperforming calculations, or sending confirmations.

Explanation: the auditors use sampling techniques for testing which involves large populations of transactions.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Which of the following statements are true?
Which of the following statements are true? 1. Fats that contain more saturated fatty acid residues than unsaturated fatty acid residues are more likely to be solid at room temperature. 2. Triacylglycerols (triglycerides) contain ester bonds. 3. Saturated fats have lower melting points than do unsaturated fats. 4. Triacylglycerols (triglycerides) always contain three identical fatty acids. 5. Unsaturated fats are more likely than saturated fats to be liquid at room temperature.
Which of the following statements is true?
Which of the following statements is true?When a company goes bankrupt, common stockholders are the first to get paid.A preferred stock promises investors a fixed stream of dividend payments.Holders of preferred stocks have residual claim on the company’s assets and cash flows.Investing in a bond of a company is riskier than investing in a stock of the same company.
Which of the following statements is true?
Which of the following statements is true?The ask price a dealer quotes on a security is the price for which he is willing to sell the security.We can buy IBM shares from a stock broker.Any investor can buy securities from a private offering.A broker holds an inventory of securities
Which of the following statements is true?
Which of the following statements is true? a. Increasing the use of trade credit offered by a supplier is a use of cash. b. Cash is decreased when new debt is issued to purchase holiday merchandise. c. Collecting an accounts receivable is a use of cash. d. Accepting the credit offered by a supplier is a source of cash.
Which of the following statements is true?
Question 34 (1 point) Which of the following statements is true? a Because prices of food (like oranges) and energy products (like gasoline) are subject to wide swings that can be temporary in nature (these prices are very volatile), the Bureau of Labor Statistics (BLS) also reports the core CPI, which is the CPI less food and energy. b Real income is the number of dollars received as wages, rent, interest, or profit. Nominal income is not adjusted for inflation....
Which of the following statements is true?
Question 1 (0.5 point) Which of the following statements is true? • Catabolism is the breakdown of large molecules into smaller ones. Energy is generally absorbed during catabolism. • Anabolism is the breakdown of large molecules into smaller ones. Energy is generally absorbed during anabolism. • Catabolism is the breakdown of large molecules into smaller ones.Energy is generally released during catabolism. • Anabolism is the breakdown of large molecules into smaller ones.Energy is generally released during anabolism. Question 2 (0.5...
Which of the following statements is true?
 Question 8 Which of the following statements is true? SNPs do not account for any of the genetic variation in the human genome SNPs are nucleotide polymorphisms that differ in a population CNVs are not an important source in the variation of the human genome All of the above statements are true Question 9 Why are genetic changes that lead to a selective disadvantage usually lost? Changes detrimental to survival can lead to fewer offspring and will not be passed on Genetic repair mechanisms will erase the mistake Organisms can...
Which of the following statements is not true?
Which of the following statements is not true?A highly spontaneous process need not occur rapidly.The reverse of a spontaneous reaction is always nonspontaneous.A spontaneous process always moves toward equilibrium.A nonspontaneous process cannot be caused to occur.
which of the following statements will be true
For a given store, demand in Week 5 is 375, and on-hand inventory at the end of Week 4 is 450. If the manufacturing lead time for this particular item is two weeks, which of the following statements will be true?a. The order release for Week 2 will be 450b. The order release for Week 3 will be 0c. The order release for Week 3 will be 375d. The order release for Week 4 will be 0
Which of the following statements is true? A. Extremely high savings rate can be counterproductive for...
Which of the following statements is true? A. Extremely high savings rate can be counterproductive for an economy in short term. B. The greater the savings rate in an economy, the slower is the rate of capital accumulation. C. For positive growth, consumption in an economy should always be less than savings. D. The greater the consumption expenditure in an economy, the faster is capital accumulation.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT