Wiggum, CPA, wants you to test the effectiveness of Ingo Corporation's control of

manually approving all purchases of over $25,000. During the year Ingo Corporation has made
1,000,000 purchases, of which 300,000 were for over $25,000. He has asked you to use a
tolerable deviation rate of 4%, although he expects the rate to only be approximately .25 Percent
(i.e., 1/4 of 1%).
A.
If Wiggum is a believer in the AICPA's table included under Attributes Sampling, the
section on Specify the Risk of Assessing Control Risk Too Low and the Tolerable
Deviation Rate of the text (below), what is the planned assessed level of control risk
here?
(Planned) Assessed Level of Control Risk
Low
Moderate
Slightly below the maximum
Maximum

Tolerable Deviation Rate

2-7%
6-12%
11-20%
(wasnt worth testing)

B.

Determine the proper sample size using Figure 9-4. 117(1)

C.

Use Figure 9-5 to calculate the achieved upper deviation rate and then the AICPA table
presented in A above to calculate the assessed level of control risk.

Circumstance

Achieved Upper
Deviation Rate
3.0

Assessed level of
Control Risk
Low

2. Assume 2 deviations were included in

the sample.

6.2

Low

3. Assume 5 deviations were included in

the sample.

10.3

Moderate

1. Assume no deviations were included in

the sample.

Note: Parts D and E in essence require you to rework the problem using ACL.
D.

Use ACL to determine the proper sample size using (Open any project, Sampling, Size)
Then select Record, Confidence=95, Population = 300000
NOTE: No commas in numbers or decimal point by the 95; there is a
decimal point buy the 1/4 of 1 % (key in .25)119(1)

E.

Use ACL to evaluate the part D results using ACL (noteyou will get differences here
because of approximations above). Also, use the table from the prior page to determine
the assessed level of control risk.
Circumstance

Achieved Upper
Deviation Rate
2.52%

Assessed Level of
Control Risk
Low

2. Assume 2 deviations were included in

the sample.

5.29%

Low

3. Assume 5 deviations were included in

the sample.

8.84%

Moderate

1. Assume no deviations were included in

the sample.