Statistical Sampling for Testing Control Procedures

MULTIPLE CHOICE 1. a. b. c. d. Auditors who prefer statistical sampling to non-statistical sampling may do so because statistical sampling helps the auditor Measure the sufficiency of the evidential matter obtained. Eliminate subjectivity in the evaluation of sampling results. Reduce the level of tolerable error to a relatively low amount. Minimize the failure to detect a material misstatement due to non-sampling ris . A!"#ER$ &. %

'f all other factors in a sampling plan are held constant( changing the measure of tolerable error to a smaller value would cause the sample size to be$ a. "maller. b. )arger. c. *nchanged. d. 'ndeterminate. A!"#ER$ %

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#hich of the following sampling plans would be designed to estimate a numerical measurement of a population( such as a dollar value, a. !umerical sampling. b. -iscovery sampling. c. "ampling for attributes. d. "ampling for variables. A!"#ER$ -

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%ased on a random sample( it is estimated that four percent( plus or minus two percent( of a firm/s invoices contain errors. 0he plus or minus two percent is nown as the estimate/s$ a. 1recision. b. Accuracy. c. 2onfidence level. d. "tandard error. A!"#ER$ A 'n order to 4uantify the ris that sample evidence leads to erroneous conclusions about the sampled population
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Each item in the sampled population must have an e4ual or nown probability of being selected. d. !umber of items in the population. Estimated standard deviation of the population. 's e8pected to be within plus or minus three standard deviations of the population mean. c. . d. A!"#ER$ 2 9. a. b. d. Each item in the sampled population must have an e4ual chance of being selected. Each item in the sampled population must have a chance of being selected proportional to its boo value. d. 0olerable error. #hen control ris and inherent ris are high( the auditor increases detection ris to maintain overall audit ris at the desired level. A!"#ER$ - 7. c. )ower than the e8pected occurrence rate in the related accounting records. b. b. A!"#ER$ % 6.143 Chapter 9 Statistical Sampling for Testing Control Procedures a. Random numbers can be used to select a sample only when each item in the population$ a. 2an be identified with a uni4ue number. 2 A!"#ER$ 5. 0he auditor studies the business and industry and applies analytical procedures as a basis for assessing inherent ris . 0he precise number of items in the population must be nown. c. b. #hich of the following statements is not true regarding audit ris assessment. 0he auditor designs substantive audit procedures to reduce detection ris to an acceptable level. 's independent of outside influence. 0he auditor studies and evaluates internal control policies and procedures for assessing control ris . a. 0otal dollar amount of the items to be sampled. 2an be assigned to a specific stratum. #hich of the following factors does an auditor generally need to consider in planning a particular audit sample for a control test. 0he tolerable occurrence rate for a control test is generally a. c.

=f the following statements( which one best differentiates statistical sampling from nonstatistical sampling. !onstatistical sampling has greater applicability to populations that lend themselves to random selection. 0his conclusion is most li ely based on a a. a. A!"#ER$ A 11. Allows auditors to inject their subjective judgment in determining sample size and selection process in order to audit items of greatest value and highest ris . 2luster sample. :igher than the e8pected occurrence rate in the related accounting records. A!"#ER$ A 1+. An advantage of statistical over non-statistical sampling is that statistical sampling$ a. 1ermits use of a smaller sample size than would be necessary with non-statistical sampling. b. b.Chapter 9 Statistical Sampling for Testing Control Procedures 144 b. 'dentical to the e8pected occurrence rate in the related accounting records. c. !onstatistical sampling has greater applicability to large populations than does statistical sampling. "tatistical sampling is a mathematical approach to inference( whereas nonstatistical sampling is a more subjective approach. An auditor samples cash disbursement records for significant errors of <3 or more. b. d. *nrelated to the e8pected occurrence rate in the related accounting records. -iscovery sample. Enables auditors to objectively measure the reliability of their sample results.. 's compatible with a wider variety of sample selection methods than is non-statistical sampling. 'n e8amining cash disbursements( an auditor plans to choose a sample using systematic selection with a random start. "ystematic sample. "tratified sample. d. A!"#ER$ % 1. 0he primary advantage of such a systematic selection is that population items . c. d. *pon finding one such error( these records are scheduled for a complete review. d. A!"#ER$ % 1&. !onstatistical sampling is more subjective( but produces greater consistency in the application of audit judgment. c. c.

Attribute sampling. b. May occur more than once in a sample. 'f certain forms are not consecutively numbered a. "tratified random sampling. b. >ariables sampling. Attribute sampling( as applied to control testing( can assist the auditor in several ways. c. c. "election of a random sample probably is not possible. E8pected rate of occurrence. -o not have to be prenumbered in order for the auditor to use the techni4ue. d. 1opulation. *nrestricted random sampling with replacement. b. d. c. 'n an attribute sampling application( holding other factors constant( sample size will increase as which of the following becomes smaller. 1recision. c.. a. A!"#ER$ % 17. Reliability.145 Chapter 9 Statistical Sampling for Testing Control Procedures a. Random number tables cannot be used. . d. b. b. - A!"#ER$ 1. #hich include errors will not be overloo ed when the auditor e8ercises compatible reciprocal options. -ispersion. A!"#ER$ A 13. #hen planning an attribute sampling application( the difference between the e8pected occurrence rate and the tolerable occurrence rate is the planned a. "ystematic sampling may be appropriate. May occur in a systematic pattern( thus ma ing the sample more representative. A!"#ER$ % 15. #hich of the following sampling methods is most useful to auditors when testing for internal control effectiveness. Reliability level. "tratified sampling should be used. " ewness. 1lanned precision. a. d. d. c. #hich of the following tas s is not enhanced by sampling. A!"#ER$ 2 16.

c. 0he lower the acceptable ris of underassessment of control ris ( the smaller will be the sample size. b. ?ailing to detect an error on a document that has been inspected by the auditor. c. Are proper labor rates being used to compute payroll. -o selling prices agree with published price lists. 0he limit used in audits of similar clients. Evaluating the sample results. d. A!"#ER$ % &&. 0he cause of the errors. #hich of the following statements concerning sample size is true. -o purchased parts meet established 4uality standards.Chapter 9 Statistical Sampling for Testing Control Procedures 146 a. c. d. 0he more critical the attribute being tested( the higher will be the tolerable occurrence rate set by the auditor( and the larger will be the sample size. A!"#ER$ % &1. 0he precision limit for control testing necessary to justify lowering the assessed control ris level depends primarily on which of the following. a. 2hoosing a sample size that is too small to achieve the sampling objective. #hich of the following would not be an attribute of interest to an auditor performing control tests. 0he amount of any substantive errors. A!"#ER$ % . ?ailing to perform audit procedures that are re4uired by the sampling plan. a. -etermining the number of documents to e8amine in testing for a specific attribute. A!"#ER$ % &. a. d. 0he materiality of the attribute@sA to be tested. #hich of the following is an element of sampling ris . An increase in the tolerable occurrence rate( other factors remaining unchanged( increases sample size. d. 2 A!"#ER$ 19. 2hoosing an audit procedure that is inconsistent with the audit objective.. b. a. "electing the documents to be tested. 0he higher the e8pected occurrence rate( other factors remaining unchanged( the larger will be the sample size. b. b. Are account distributions @debits and creditsA correct. c. d. c. E8amining the documents. b.

c. 'f all other factors in a sampling plan are held constant( changing the ris of underassessment from five percent to three percent would cause the sample size to be$ a. c. An auditor performs a test to determine whether all merchandise for which the client was billed was received. b. "maller. =verassessment of control ris . Merchandise received. *nchanged. a.. b. 2anceled chec s. 'n utilizing statistical sampling techni4ues( the auditor must apply judgment in all but which of the following tas s. -etermining an acceptable ris of underassessing control ris . 2alculating the actual error rate. d. A!"#ER$ % &3. c. d. 'ndeterminate. b. d. Receiving reports. A!"#ER$ 2 &6. )arger.147 Chapter 9 Statistical Sampling for Testing Control Procedures &+. . c. A!"#ER$ % &. *nderassessment of control ris . 0o determine sample size in an attribute sampling application( what must be specified. 0his situation illustrates the ris of a. A!"#ER$ % &5. Although mathematically based( statistical sampling does not replace audit judgment. b. "electing a tolerable rate of error. 'ncorrect acceptance. Assessing the materiality of control wea nesses. >endors/ invoices. d. 'ncorrect rejection. b. a. 1recision( reliability( standard deviation. 1opulation mean( e8pected error rate( precision. 'n the e8amination of the financial statements of -elta 2ompany( the auditor determines that in performing a test of internal control effectiveness( the rate of error in the sample does not support the auditor/s preconceived notion of a tolerable occurrence rate when( in fact( the actual error rate in the population does meet the auditor/s notion of effectiveness. 0he population for this test consists of all a.

#hich of the following statements regarding statistical sampling in auditing is true. "tatistical sampling methods are more appropriate for control testing when the auditor elects to reprocess transactions( than when controls are tested by means of document e8amination. 2 A!"#ER$ &7. b. Although statistical sampling may be applied to control testing( it is re4uired for substantive testing purposes. A sufficient understanding of the internal control system is to be obtained to plan the audit and to determine the nature( timing( and e8tent of tests performed.Chapter 9 Statistical Sampling for Testing Control Procedures 148 c. 0he major wea ness of nonstatistical @judgmentalA sampling is it a. d. A!"#ER$ 2 &9. 1recision( reliability( e8pected occurrence rate. c. *sually re4uires larger sample sizes than statistical sampling. for an A!"#ER$ +. to be d. 'nasmuch as audits are test-based( generally accepted auditing standards re4uire the use of statistical sampling methods whenever the auditor decides to e8amine only part of a population. d. "ufficient competent evidential matter is to be obtained through inspection( observation( in4uiries( and confirmations to afford a reasonable basis opinion regarding the financial statements under e8amination. a.. 0he application of statistical sampling techni4ues is least related to which of the following generally accepted auditing standards. b. 0he wor is to be ade4uately planned and assistants( if any( are to be properly supervised. 'n all matters relating to the assignment( an independence in mental attitude is to be maintained by the auditor or auditors. . "ampling methods are used by auditors in both control testing and substantive testing. 1opulation mean( standard deviation( precision. % c. a.

to be objectively ?re4uently results in samples that are not representative of the population. 0he auditor finds five deviations and concludes that procedures wor inade4uately. d. d. % A!"#ER$ +1. a. An auditor is testing credit authorization procedures by e8amining sales invoices for credit approval by the credit department. 0he procedures will be considered to be wor ing ade4uately if 95C of all sales invoices either indicate approval or are cash sales. 0he true population deviation rate is 5C. 0he true population deviation rate is &C. "ampling for variables. invoices.. An advantage of using statistical over non-statistical sampling methods in tests of controls is that the statistical methods . Bives less accurate point estimates of parameters than statistical sampling. 'f an auditor( planning to use statistical sampling( is concerned with the number of a client/s sales invoices that contain mathematical errors( the auditor would most li ely utilize a. % c. 0he auditor selects a random sample of 1.149 Chapter 9 Statistical Sampling for Testing Control Procedures b. 0he actual population deviation rate is &C. 0he auditor finds no deviations and concludes that the procedures wor ade4uately. 0he auditor finds no deviations and concludes that procedures wor ade4uately. A!"#ER$ +&. b. c. A!"#ER$ % ++. "ampling for attributes. 0he true population deviation rate is 3C. 0he auditor finds five deviations and concludes that procedures wor inade4uately. d. -oes not allow sampling ris measured. 'n this situation( which of the following outcomes illustrates underassessment. Random sampling with replacement. "tratified random sampling. b. c.

c. 'f all other factors specified in an attribute sampling plan remain constant( changing the specified precision from 5C to 1. 'ncrease. ?ailure to accept the statistical hypothesis that a boo value is not materially misstated when the true boo value is not materially misstated. a.Chapter 9 Statistical Sampling for Testing Control Procedures 150 a. -ecrease.. d. d. "everal ris s are inherent in the evaluation of audit evidence which has been obtained through the use of statistical sampling. c. b. 2hange by . % A!"#ER$ +. 2an more easily convert the sample into a dual-purpose test useful for substantive testing. Remain the same. ?ailure to draw a random sample from the population. A!"#ER$ 2 . d. Eliminate the need to use judgment in determining appropriate sample sizes.C( and changing the specified reliability from 96C to 9+C would cause the re4uired sample size to a. )ess than the ris of underassessment in the auditor/s sample. As a result of tests of controls( an auditor underassessed control ris and decreased substantive testing. A!"#ER$ - +5. )ess than the occurrence rate in the auditor/s sample.C. More than the ris of underassessment in the auditor/s sample. c. Afford greater assurance than a non-statistical sample of e4ual size. #hich of the following ris s is an e8ample of the ris of underassessment of control ris . A!"#ER$ 2 +3. c. b. ?ailure to accept the statistical hypothesis that internal control is unreliable when( in fact( it is. ?ailure to properly define the population to be sampled. More than the occurrence rate in the auditor/s sample. 1rovide an objective basis for 4uantitatively evaluating sample ris s. 0his underassessment occurred because the true occurrence rate in the population was a. b. b. d.

#hich of the following factors is generally not considered in determining the sample size for a test of controls.. 0he auditor estimated from previous e8perience that about & 1D&C of the sales invoices lac ed approval. 'n the evaluation of this sample( the auditor decided to increase the level of the preliminary assessment of control ris because the a... >ariable sampling. a. d. c. Achieved upper occurrence limit @7CA was more than the percentage of errors in the sample @+ 1D&CA. "tratified sampling.(. 1recision is subtracted from the tolerable rate of error to determine the acceptability of sample results. 0he auditor designed a statistical sample that would provide a 1C ris of assessing control ris too low @99C confidenceA that not more than 6C of the sales invoices lac ed approval. E8pected occurrence rate @6CA was more than the percentage of errors in the sample @+ 1D&CA. invoices was e8amined and 6 of them were lac ing approval. 'n the review of client invoices the auditor should use a. c. 0olerable rate @6CA was less than the achieved upper occurrence limit @7CA. 0o evaluate the sample results for an attributes sampling application( a measure of precision is re4uired. a. A sample of &. d. 0he auditor has established a tolerable rate of 3C.. b.. c. 0olerable rate. sales invoices processed during the year. b. #hich of the following statements is true regarding precision. 1opulation size. . E8pected occurrence rate @& 1D&CA was less than the tolerable rate @6CA. 0he auditor then determined the upper occurrence limit to be 7C. An auditor desired to test credit approval on 1. -iscovery sampling. d.151 Chapter 9 Statistical Sampling for Testing Control Procedures +6. b. A A!"#ER$ . A!"#ER$ - +9. A!"#ER$ A +7. 0he e8pected population occurrence rate of client billing errors is +C. Attribute sampling. Ris of underassessment. E8pected population occurrence rate.

A!"#ER$ % . "ample occurrence rate is less than the e8pected occurrence rate used in planning the sample. As the population size doubles( the sample size also should double.1. d. b. 0he population size has little or no effect on determining sample size e8cept for very small populations. "ample occurrence rate plus the allowance for sampling ris e8ceeds the tolerable rate. 0he e8pected population occurrence rate has little or no effect on determining sample size e8cept for very small populations. "ample occurrence rate plus the allowance for sampling ris e4uals the tolerable rate. #hich of the following statements is correct concerning statistical sampling for control testing.Chapter 9 Statistical Sampling for Testing Control Procedures 15 b. 1recision is added to the tolerable rate of error to determine the acceptability of sample results. b. A A!"#ER$ . a. An auditor who uses statistical sampling for attributes in testing internal controls should increase the assessed level of control ris when the a. d. An auditor wishes to determine if the error rate on travel reimbursement claims is within the five-percent tolerance level set by management. b. >ariables sampling. - A!"#ER$ . c.+. Attribute sampling. ?or a given tolerable rate( a larger sample size should be selected as the e8pected population deviation rate decreases. #hat sampling plan should the auditor use.&. c. d. 1recision is subtracted from the sample occurrence rate and the result is compared to the tolerable rate of error. c. 1recision is added to the sample occurrence rate and the result is compared to the tolerable rate of error. 2 A!"#ER$ . 0olerable rate less the allowance for sampling ris e8ceeds the sample occurrence rate. 11" sampling. a. d. c. Eudgment sampling.

3. A!"#ER$ EF1E20E.. More accurate results are obtained. "tatistical sampling for attributes is most applicable in situations where a visible in the form of e8ists. A smaller sample size can be used. whereas A!"#ER$ 3. A*-'0 0RA')( -=2*ME!0A0'=! As contrasted with statistical sampling( nonstatistical sampling is a more approach to inference...C. 0he auditor samples cash disbursements for minor errors of <3 or less.9. A!"#ER$ - COMPLETION: . 31. A!"#ER$ . d. A!"#ER$ 2 . An important difference between a statistical sample and a non-statistical @judgmentalA sample is that with a statistical sample$ a. d. c.153 Chapter 9 Statistical Sampling for Testing Control Procedures . 0he auditor is most li ely to use a. 0he . !o judgment is re4uired( everything is by formula. b. c.7. b. A!"#ER$ "*%EE20'>E estimates the fre4uency of events( is an estimate of amount. >ariables sampling.6. 0he is the anticipated error rate( whereas the is the ma8imum rate of error acceptable to the auditor( while still warranting a lowering of assessed control ris below the ma8imum level. 0he parameter to be estimated is the error rate( which might be as high as 1. %loc sampling. A00R'%*0E "AM1)'!B( >AR'A%)E" "AM1)'!B . -iscovery sampling.=22*RRE!2E RA0E( 0=)ERA%)E =22*RRE!2E RA0E the precision range( the larger the sample size. 1opulation estimates with measurable reliability can be made. Attributes sampling.

2. A!"#ER$ %E0A 3. ?. HHHH1. B. HHHH&. Attribute sampling Alpha ris -iscovery sampling %eta ris E8pected occurrence rate 1recision -iscovery sampling "ampling ris "ystematic sampling 0olerable occurrence rate *pper occurrence limit >ariables sampling An estimate of fre4uency of events. A!"#ER$ )=#ER of underassessmentG is HHHHHHHHHHHH 53. !ARR=#ER 0he more critical an attribute to those control policies and procedures relevant to an audit( the the tolerable occurrence rate. A!"#ER$ :'B: MATCHIN : 36.. ). E. %. 0he anticipated error rate. :. A. '. An orderly approach to locating a particular event. A!"#ER$ 1R=%A%')'0J 33.Chapter 9 Statistical Sampling for Testing Control Procedures 154 A!"#ER$ 3&. *nder conditions of audit evidence is needed. #hen documents are not prenumbered( an acceptable alternative to the use of random number tables or computer-generated numbers is . . HHHH+. E. 'ndicate by letter the term matching the definition given. I Another term for Gris ris . Random selection re4uires that items to be included in the sample must be drawn on a basis. A!"#ER$ "J"0EMA0'2 "AM1)'!B detection ris ( a minimal 4uantity of 35. -. K.

:op ins has identified the following attributes to be tested.% 1. 3. HHHH9. 9. -oes the invoice amount cause the customer to e8ceed the prepared credit limit. "=)*0'=!$ 1. Ris that the auditorLs conclusions about a population will be incorrect. ?or each attribute( indicate the appropriate sampling unit and carefully define what constitutes an error. Are proper accounts debited and credited. 1.E 5. "AM1)'!B *!'0$ "ales invoice ERR=R$ )ac of agreement between invoice and order as to$ 0ype of goods -oes the customer order agree with the invoice as to type and 4uantity of goods.E . "=)*0'=!$ 1.' 7.155 Chapter 9 Statistical Sampling for Testing Control Procedures HHHH.. 6.. A random selection method that involves choosing every nth item in the population until the re4uisite sample size has been reached. :ave goods been shipped but not billed. +. HHHH1. Ma8imum rate of error acceptable to the auditor. 0he calculated ma8imum error rate based on the results of sampling. 5. 7.? P!O"LEM#ESSA$: 37. HHHH6. -o invoiced prices agree with official price lists. Ris of overassessment. . . :ave goods been billed but not shipped.2 +. Ris of underassessment.A &.: 6. &. Range within the true answer most li ely falls. Margaret :op ins( 21A( wishes to test the effectiveness of internal controls over the customer billing function of Eac Ls #holesale :ardware( an audit client. HHHH7. -o credit and discount terms appearing on face of customer invoice accord with company policy. HHHH5.3.. HHHH3. -oes the shipping order agree with the invoice as to type and 4uantity of goods..K 9. :as customer credit been approved..

*sing a vouchering and vendor billing application as an e8ample( assume that you are interested in evaluating internal controls relative to ordering goods( receiving goods( and processing vendor invoices. Evaluating the results of the voucher testN . +. 9. "AM1)'!B *!'0$ "ales invoice ERR=R$ 'ncorrect debits or credits appearing on face of invoice and not corrected before posting accounts. 7. . "ampling can assist the auditor in various ways during the e8amination of documentary evidence for tests of internal controls. 5. 39. -etermining the number of vouchers to testN b. "AM1)'!B *!'0$ "ales invoice ERR=R$ )ac of agreement between invoice and shipping order as to$ 0ype of goods Muantity of goods "AM1)'!B *!'0$ "ales invoice ERR=R$ )ac of evidence of credit approval on face of invoice "AM1)'!B *!'0$ "ales invoice ERR=R$ 'nvoice amount plus previous customer balance e8ceeds prepared credit limit "AM1)'!B *!'0$ "ales invoice ERR=R$ "hipping order andDor bill of lading not attached to customer invoice "AM1)'!B *!'0$ %ill of lading ERR=R$ Matching invoice not located "AM1)'!B *!'0$ "ales invoice ERR=R$ 1rice not in agreement with master price list and no evidence of proper approval of billed price "AM1)'!B *!'0$ "ales invoice ERR=R$ 2redit andDor discount terms at variance with company policy( and no evidence of proper approval of 4uoted credit and discount terms. 3.Chapter 9 Statistical Sampling for Testing Control Procedures 156 Muantity of goods 1rice of goods 2redit and discount terms &. "electing the vouchers for testingN c. -iscuss how attribute sampling might assist you in the following phases of your tests of controls$ a.. 6.

Beorge Eones( 21A( wishes to test payroll controls for :op ins Manufacturing( an audit client. c. #hat impact will a low rate relative to a high rate have on the calculated sample size. b.. 'f vouchers are prenumbered( the auditor can elect to use a random selection approach to selecting vouchers test for predefined attributes. associated with the a. 2orrectness of pay rates and hours used in preparing the payroll summaryN &. 0hese parameters( along with an estimated occurrence rate may then be used as inputs to determining sample size. c. 'n determining sample size( Eones can select an e8pected occurrence rate ranging from the low for attribute number & to the high for attributes + and . #hat other factors must Eones consider before determining the sample size. :e has identified the following attributes of interest for testing purposes$ 1. Eones believes that four or more errors for each of the four attributes is significant. b. %ased on the pilot sample( calculate the e8pected occurrence rate and the tolerable occurrence rate for each attribute. "=)*0'=!$ Assessing audit ris e8penditure cycle.. d.. 2orrectness of gross pay( withholdings( and net payN . 2orrectness of debits and credits.. payroll summary entries produced the following calculated upper occurrence .157 Chapter 9 Statistical Sampling for Testing Control Procedures d. 0he upper occurrence limit can be compared with the tolerable occurrence rate to support raising or lowering the assessed level of control ris . Required: a. c. :aving e8amined the sample for the attributes of interest( the auditor can calculate the observed error rate and the upper occurrence limit. 5. Benuineness of listed employeesN +. A pilot test of forty payroll transactions revealed the following errors$ =ne transaction revealed an incorrect pay rateN two transactions resulted in incorrect calculations of either gross pay or withholdingsN and two transactions resulted in erroneous debits or credits. All listed employees were found to be wor ing for the company during the pay period being tested. Assuming that a sample of 1. 'n determining the number of vouchers to test( the auditor will need to set a tolerable occurrence rate and an acceptable ris of underassessment.

c.C 5. 0he e8pected occurrence rates are$ Attribute !o.. .C Attribute !o.C 1&. 0herefore( Eones must plan to audit these accounts more intensively than under conditions of strong internal control. d.. 0he tolerable occurrence rate is 1..D.. =nly attribute + produces an unacceptable upper occurrence limit( e8ceeding the tolerable rate of 1.$ 6. Attribute Attribute Attribute Attribute "=)*0'=!$ a..C 0he higher the e8pected occurrence rate( the larger will be the sample size.C b..C Attribute !o. 1$ &.Chapter 9 Statistical Sampling for Testing Control Procedures 158 limits( what impact will these limits have on Eones substantive audit program.. +$ 3. Eones must determine the acceptable ris of underassessing control ris . 1$ &$ +$ .C. . Biven incorrect calculation of gross pay( withholdings( and net pay( Eones should plan to focus more heavily on inventory costing( inasmuch as inventory includes both direct and indirect labor components.A for each of the attributes..$ 3. &$ .C @.. 'ncorrect calculation of gross pay and withholdings will also impact the calculation of employerLs payroll ta8 e8pense.3C Attribute !o. :e should also concentrate on payroll cost included in general and administrative e8pense( as well as on accrued payroll and payroll ta8es payable at year end.C ..