Define and describe audit sampling for exception rates. Auditors use sampling for tests of controls and substantive tests of transactions to determine whether controls are operating effectively and whether the rate of monetary errors is below tolerable limits. To do this, auditors estimate the percent of items in a population containing a characteristic or attribute of interest. This percent is called the occurrence rate or exception rate. For example, if an auditor determines that the exception rate for the internal verification of sales invoices is approximately 3 percent, then on average 3 of every 100 invoices are not properly verified.
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