Will sample size increase if the population variability is higher than expected?
Yes, there is a direct relationship between sample size and population variability. Population variability is how similar or dissimilar items in a population are.
If the population variability increases, then that means that the items in the population aren’t as similar as the auditor expected. This increases the level of risk, so the audit team should increase their sample size.
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Will sample size increase or decrease if the assessed level of risk is higher than expected?
If the assessed level of risk is higher than what the auditor originally determined in the planning phase, then the audit team should increase their sample size or choose a testing method that provides for higher quality evidence.

Will sample size increase or decrease if there is a decrease in the tolerable misstatement?
There is an inverse relationship between sample size and tolerable misstatement, so the sample size would increase if the tolerable misstatement decreases.

Will sample size increase or decrease if there is an increase in the tolerable misstatement?
There is an inverse relationship between sample size and tolerable misstatement, so the sample size would decrease if the tolerable misstatement increases.