As a result of tests of controls, an auditor incorrectly assessed control risk as high and inappropriately followed the substantive strategy for the financial statement audit. This assessment occurred because

Question

BlackTom AI · Accepted Answer

In evaluating why the auditor incorrectly assessed control risk as high and pursued a substantive strategy, we must examine how sampling results relate to overall population characteristics and tolerable rate.
Option A: 'The sample’s upper deviation rate was lower than the auditor’s tolerable rate, but the population’s true deviation rate was higher than the auditor’s tolerable rate.' If the population true deviation rate exceeds tolerable rate, that would justify raising control risk and not relying on controls; however, this option says the sample upper deviation rate is lower than tolerable, which would typically not support escalating control risk. The inconsistency between a high population deviation rate and a low sample rate would be unusual and could suggest sampling risk or incorrect interpretation rather than the auditor mistaking the strategy. This combination is less consistent with a sudden move to a substantive approach based on control failure.
Option B: 'The sample’s upper deviation rate and the population’s true deviation rate were both less than the auditor’s tolerable rate.' If both the sample and population rates are below tolerable, the proper conclusion would usually be to maintain planned reliance on controls and possibly a reduced substantive test effort, not to inflate control risk. This would not explain why a substantive strategy was inappropriately followed.
Option C: 'The sample’s upper deviation rate and the population’s true deviation rate were both more than the auditor’s tolerable rate.' When both rates exceed tolerable, the natural consequence is to conclude that controls are not effective and to reduce reliance on them, increasing substantive procedures. This would be a rational alignment with a higher control risk assessment, not an inappropriate high risk assessment followed by substantive strategy due to sampling misinterpretation. Therefore, this option describes a consistent, correct response rather than the observed misstep described in the question.
Option D: 'The sample’s upper deviation rate was higher than the auditor’s tolerable rate, but the population’s true deviation rate was lower than the auditor’s tolerable rate.' Here, the upper deviation rate in the sample exceeds tolerable risk, which would suggest higher deviation risk, yet the true population deviation rate being below tolerable implies that the broader population does not support removing reliance on controls. This discrepancy between sample result and population reality can lead the auditor to misinterpret the evidence, overreacting to sample results and applying a substantive strategy even though the population evidence would not justify doing so. This explains why the assessment could be incorrect: the sampling results suggested higher risk, while population truth did not, causing an inappropriate control-risk assessment and procedural approach.
Across all options, the core issue is the misalignment between what a subset (the sample) indicates and what the entire population actually shows. When the sample’s upper deviation rate is above tolerable while the population true deviation rate is below tolerable, the correct interpretation should weigh the population evidence more heavily and avoid unnecessarily abandoning the controls-based strategy. Conversely, the other options either present scenarios where the sample and population results are aligned with the decision (B and C), or they describe conditions that would not prompt the described misassessment (A), which makes them inconsistent with the situation described in the prompt.

As a result of tests of controls, an auditor incorrectly assessed control risk as high and inappropriately followed the substantive strategy for the financial statement audit. This assessment occurred because单项选择题

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