An auditor is using attribute sampling to test the operating effectiveness of a control. The auditor specifies a tolerable deviation rate of 5%. The sample of 100 items yields 2 deviations. The calculated upper deviation rate at the 95% confidence level is 6.2%. What is the auditor's MOST appropriate conclusion?

Answer options:

The control is operating effectively because the sample deviation rate (2%) is less than the tolerable rate (5%).

The control cannot be relied upon as planned because the upper deviation rate exceeds the tolerable deviation rate.

The auditor should increase the sample size to reduce the upper deviation rate to 5%.

The control is effective because the allowance for sampling risk is only 1.2%.

How to approach this question

Attribute Sampling Rule: Compare Upper Deviation Rate (UDR) vs Tolerable Deviation Rate (TDR). If UDR > TDR, Reject.

Full Answer

B.The control cannot be relied upon as planned because the upper deviation rate exceeds the tolerable deviation rate.✓ Correct

The auditor must consider sampling risk. The Upper Deviation Rate represents the maximum likely deviation rate in the population. Since 6.2% > 5%, the risk is too high that the control is failing more than tolerated.

Common mistakes

Comparing Sample Deviation Rate (2%) to Tolerable Rate (5%).

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