Reference no: EM132756844

Problem 1: Which of the following statements concerning sample size is true?

a. An increase in the tolerable occurrence rate, other factors remaining unchanged, increases sample size.

b. The higher the expected occurrence rate, other factors remaining unchanged, the larger will be the sample size.

c. The more critical the attribute being tested, the higher will be the tolerable occurrence rate set by the auditor, and the larger will be the sample size.

d. The lower the acceptable risk of underassessment of control risk, the smaller will be the sample size.

Problem 2: In the examination of the financial statements of Delta Company, the auditor determines that in performing a test of internal control effectiveness, the rate of error in the sample does not support the auditor's preconceived notion of a tolerable occurrence rate when, in fact, the actual error rate in the population does meet the auditor's notion of effectiveness. This situation illustrates the risk of

a. Underassessment of control risk.

b. Overassessment of control risk.

c. Incorrect rejection.

d. Incorrect acceptance.