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Exam AUD topic 1 question 871 discussion

Actual exam question from AICPA's AUD
Question #: 871
Topic #: 1
[All AUD Questions]

The diagram below depicts an auditor's estimated maximum deviation rate compared with the tolerable rate, and also depicts the true population deviation rate compared with the tolerable rate. As a result of tests of controls, the auditor assesses control risk too low and thereby decreases substantive testing. This is illustrated by situation:

  • A. I.
  • B. II.
  • C. III.
  • D. IV.
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Suggested Answer: C 🗳️
Choice "C" is correct. If the auditor assesses control risk too low, then the true population deviation rate exceeds the auditor's tolerable rate while the auditor's estimate of the maximum deviation rate (based on sample results) was less than the tolerable rate. Only cell III represents this set of conditions.
Choices "A", "B", and "D" are incorrect, per the above Explanation.
by gemazyni at April 5, 2025, 5:14 p.m.

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