The auditor tested a sample of recorded sales invoices for evidence of credit ap

Question

The auditor tested a sample of recorded sales invoices for evidence of credit approval. Based on the results of the sample, the auditor concluded that there was a satisfactory rate of approvals. Unknown to the auditor, credit approvals in the population were not satisfactory. This would be an example of: A. Risk of assessing control risk too low B. Risk of assessing control risk too high C. Risk of incorrect acceptance D. Risk of incorrect rejection The auditor tested a sample of recorded sales invoices for evidence of credit approval. Based on the results of the sample, the auditor concluded that there was a satisfactory rate of approvals. Unknown to the auditor, credit approvals in the population were not satisfactory. This would be an example of: A. Risk of assessing control risk too low B. Risk of assessing control risk too high C. Risk of incorrect acceptance D. Risk of incorrect rejection The auditor tested a sample of recorded sales invoices for evidence of credit approval. Based on the results of the sample, the auditor concluded that there was a satisfactory rate of approvals. Unknown to the auditor, credit approvals in the population were not satisfactory. This would be an example of: A. Risk of assessing control risk too low B. Risk of assessing control risk too high C. Risk of incorrect acceptance D. Risk of incorrect rejection

Explanation / Answer

Control Risk: Control risk is the risks which are controllable by the management. And auditor is there for doing audit not for controlling.

so option A and Option B both are not correct.

In the given situation Auditor accepted a situation without check the proper credit approval documents and other related record of the same, So this is the risk of incorrect acceptace.

Answer = Option C = Risk of incorrect acceptance

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