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An auditor desired to test credit approval on 10,000 sales
invoices processed during the year. The auditor designed a
statistical sample that would provide 1% risk of assessing control
risk too low (99% confidence) that not more than 7% of the sales
invoices lacked approval. The auditor estimated from previous
experience that about 2 1/2% of the sales invoices lacked
approval. A sample of 200 invoices was examined and 7 of them
were lacking approval. The auditor then determined the
achieved upper precision limit to be 8%.
In the evaluation of this sample, the auditor decided to
increase the level of the preliminary assessment of control risk
because the