You have been asked to test the effectiveness of Ingo Corporation's control of manually approving all purchases over $25

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You Have Been Asked To Test The Effectiveness Of Ingo Corporation S Control Of Manually Approving All Purchases Over 25 1 (52.42 KiB) Viewed 83 times

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 6 percent (although she expects the rate to be only approximately 6 25 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. (Planned) Assessed Level of Control Risk Low Moderate Slightly below the maximian Maximum a. What is the planned assessed level of control risk? Tolerable Deviation Rate 2-7X 6-12% 11-20% Over 2003 Low O Moderate Slightly below the maximum O Maximum b. Determine the appropriate sample size and allowable number of deviations using Egure 94 items Samples Allowable number of deviations c. Use Egure 9.5 to determine the achieved upper deviation rate and the above table to determine the assessed level of control risk under the following circumstances. Assume that the sample size was 80 items (Round your answers to 1 decimal place.) Achieved Upper Deviation Rate Assessed Level of Control Risk Circumstance No deviations were included in the sample. One deviation is included in the sample Eight deviations were included in the sample 94