Will a larger tolerable misstatement lead to an increase or decrease in sample size?
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Show  The sample size for a substantive test of details of an account balance is affected by a number of factors. Assuming all other information remains constant, which of the following would lead to a smaller sample size? Which of the following sampling methods would be used to estimate a numeric measurement of a population, such as a monetary value? A number of factors influence the sample size for a substantive test of details of an account balance. All other factors being equal, which of the following would lead to a larger sample size? The risk of incorrect acceptance relates to the An auditor may decide to decrease the desired level of confidence when Which of the following relationships is correct? Which of the following statements concerning the auditor’s use of statistical sampling is correct? In classical variables sampling, which of the following must be known in order to estimate the appropriate sample size required to meet the auditor’s needs in a given situation? Which of the following statements concerning monetary-unit sampling is correct? An auditor is performing substantive procedures of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past experience indicates that there may be numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate? When determining the sample size for MUS application, the auditor must determine all of the following except: Monetary-unit-sampling [MUS] is less efficient and generally not used if Which of the following would most likely be an advantage in using classical variables sampling rather than monetary-unit sampling? An auditor would conclude that an account balance is not fairly stated if the __________________ is less than the __________________. An auditor plans to use a monetary-unit sampling plan with a systematic sample selection on an account balance of €1,000,000. There are over 50 items that make up the account balance, ten of which are individually over €50,000. To ensure that all accounts with balances of at least €50,000 are selected, the minimum sample size should be In a probability-proportional-to-size sample with a sampling interval of €15,000, an auditor discovered that a selected inventory item with a recorded amount of €5,000 had an audited amount of €3,500. If this were the only misstatement discovered by the auditor, the projected misstatement of this sample would be Which of the following statements is true regarding audit sampling? Using the following information and ratio projection, what is the best estimate of the misstatement in the account? Which of the following represents the reason(s) that statistical sampling has fallen out of favour? In applying classical variables sampling, an auditor will generally evaluate sample results by calculating the possible error in either direction of a projected misstatement (or point estimate). This statistical concept is known as Which of the following is considered one of the main advantages of classical variables sampling over monetary-unit sampling? An auditor is determining the sample size for an inventory observation using difference estimation [classical variables sampling]. To calculate the required sample size, the auditor usually determines the
Using classical variables sampling, the projected population misstatement is €40,000 and the confidence bound is €2,400. What amount will be compared to tolerable misstatement to determine whether the account is fairly stated? How does tolerable misstatement affect sample size?An increase in tolerable misstatement Decrease The lower the tolerable misstatement, the larger the sample size needs to be.
How would your sample size change if you increased your tolerable misstatement?The lower the reliance on the results of a substantive procedure using audit sampling, the higher the sampling risk the auditor is willing to accept and, consequently, the smaller the sample size. The higher monetary value of the tolerable misstatement rate, the smaller the sample size and vice versa.
What affects sample size in auditing?In determining the sample size, the auditor should consider whether sampling risk is reduced to an acceptably low level. Sample size is affected by the level of sampling risk that the auditor is willing to accept. The lower the risk the auditor is willing to accept, the greater the sample size will need to be.
How does control risk affect sample size?A high control risk assessment may result in a decision not to perform tests of controls. The higher the tolerable rate the lower the sample size and vice versa. If errors are expected, a larger sample usually needs to be examined to confirm that the actual error rate is less than the tolerable error rate.
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