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An internal auditor is using attributes sampling to test internal controls. Under which of the following circumstances would the auditor increase the original sample size to estimate error occurrence at a given precision and confidence level?
Correct Answer: A
* A. The sample rate of occurrence plus the precision exceeds the acceptable error rate:Correct. If the sample rate of occurrence (estimated error rate in the sample) plus the margin of error exceeds the acceptable error rate, it indicates a potential issue. To refine the estimate and maintain the desired confidence level and precision, the sample size needs to be increased. * B. The sample rate of occurrence is less than the acceptable error rate:If the sample rate is below the acceptable error rate, there is no immediate need to adjust the sample size. * C. The acceptable rate of occurrence less the precision exceeds the sample rate of occurrence:This condition does not imply the need to increase sample size but rather suggests acceptable results. * D. The sample rate of occurrence plus the precision equals the acceptable error rate:This indicates the estimate is at the threshold, but it does not necessitate increasing the sample size unless more precision is required. CIA Exam Syllabus Reference: Domain II: Risk Management and Control - Sampling and Error Analysis.