ExpertMedium1 markMultiple Choice
CPA · Question 53 · Area III: Performing Procedures
An auditor is determining the sample size for a test of controls. Which of the following changes would result in a DECREASE in sample size?
An auditor is determining the sample size for a test of controls. Which of the following changes would result in a DECREASE in sample size?
Answer options:
A.
An increase in the expected population deviation rate.
B.
A decrease in the risk of assessing control risk too low.
C.
An increase in the tolerable deviation rate.
D.
An increase in the population size (for a large population).
How to approach this question
Sample Size Drivers: Risk (Inverse), Tolerable Error (Inverse), Expected Error (Direct). <br/>Want smaller sample? Accept more risk or more error.
Full Answer
C.An increase in the tolerable deviation rate.✓ Correct
An increase in the tolerable deviation rate.
There is an inverse relationship between the tolerable deviation rate and sample size. If the auditor is willing to accept a higher rate of error, they can test fewer items.
Common mistakes
Confusing Expected Rate (Direct) with Tolerable Rate (Inverse).
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