Question

38. While selecting a sample of sales invoices for a test of internal controls, the auditor...

38.

While selecting a sample of sales invoices for a test of internal controls, the auditor was unable to locate one invoice and classified this invoice as non-deviation. This is an example of

Multiple Choice

sampling risk.

incorrect acceptance.

nonsampling risk.

deviation risk.

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Answer #1

Sampling risk: Means selcting samples out of incomplete or inaccurate population. In the given case its assumed that samples selected were appropriate.

Non sampling risk: Means risk other than sampling risk, performing inappropriate procedures etc. but in the given case auditor performed appropriate procedures so its not non sampling risk.

Deviation Risk: Tests of controls deviation means departure from prescribed controls, In given case one sample is missing that sample might be deviate from the controls exist in the organisation and auditor classified as non-deviation. so given risk is deviation risk

Ans) Deviation Risk

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