an auditor is calcualting a sample size related to substantive test of balances, which facctor with other factors being equal

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16-12-2022
Mathematics

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an auditor is calcualting a sample size related to substantive test of balances, which facctor with other factors being equal

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PratikshaS PratikshaS · Answer 1 · 2022-12-25T09:00:09-05:00

When selecting a sample size for substantive tests of balances a factor, other factors being equal, that would result in a larger sample is a decrease in the tolerable misstatement.

The correct answer is an option (A)

In this question we have been given we need to a factor when selecting a sample size for substantive tests of balances that would result in a larger sample.

We know that there is an inverse relationship between sample size and tolerable misstatement.

So the sample size would increase if the tolerable misstatement decreases.

A sample size will increase when expected misstatement increase or population variability is higher.

Therefore, an auditor is calcualting a sample size related to substantive test of balances, which facctor with other factors being equal - a decrease in the tolerable misstatement

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The complete question is:

When selecting a sample size for substantive tests of balances which factor, other factors being equal, would result in a larger sample?

A) a decrease in the tolerable misstatement

B) small expected misstatements

C) an increase in the tolerable misstatement

D) an increase in the acceptable risk of incorrect acceptance