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.
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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.
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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.
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What is a tolerable misstatement?
Tolerable misstatement is the application of the maximum amount of accepted (tolerable) errors within a given test sample. The goal of the audit test should be for the tolerable misstatement to be less than the materiality level of the financial statements as a whole.
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 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.
What is a tolerable misstatement?
Tolerable misstatement is the application of the maximum amount of accepted (tolerable) errors within a given test sample. The goal of the audit test should be for the tolerable misstatement to be less than the materiality level of the financial statements as a whole.
