ExpertHard1 markMultiple Choice
CPA · Question 68 · Area III: Performing Procedures
An auditor is determining the sample size for a test of controls. Which of the following factors has an INVERSE relationship with sample size?
An auditor is determining the sample size for a test of controls. Which of the following factors has an INVERSE relationship with sample size?
Answer options:
A.
Tolerable deviation rate.
B.
Expected population deviation rate.
C.
Desired confidence level.
D.
Population size (for large populations).
How to approach this question
Sampling Relationships: Tolerable Rate is Inverse (Loose rules = Less work). Expected Rate/Confidence are Direct (More errors/More certainty = More work).
Full Answer
A.Tolerable deviation rate.✓ Correct
A
The tolerable deviation rate is inversely related to sample size. If the auditor is willing to accept a higher rate of error (less precision), a smaller sample is required.
Common mistakes
Confusing Tolerable (Inverse) with Expected (Direct).
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