AICPA CPA-Auditing Exam - Topic 1 Question 126 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 126
Topic #: 1

An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1% risk of assessing control risk too low (99% confidence) that not more than 7% of the sales invoices lacked approval. The auditor estimated from previous experience that about 2.5% of the sales invoices lacked approval. A sample of 200 invoices was examined and 7 of them were lacking approval. The auditor then determined the upper deviation rate to be 8%.

The allowance for sampling risk was:

A5.5%

B4.5%

C3.5%

D1%

Show Suggested Answer

Suggested Answer: B

Choice 'b' is correct. The allowance for sampling risk is the excess of the 8% upper deviation rate over the 3.5% (= 7 200) sample deviation rate, or 4.5%.

Choices 'a', 'c', and 'd' are incorrect, based on the above Explanation: .

by Carla at May 12, 2026, 01:35 AM

Limited Time Offer

25%

Off

Get Premium CPA-Auditing Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Willard

16 days ago

I remember we practiced calculating the allowance for sampling risk, but I'm not sure how to apply it here with the upper deviation rate.

upvoted 0 times

...