ExpertMedium1 markMultiple Choice
CPA · Question 68 · Area 3: Performing Procedures
Which of the following is a 'Type 1' error in audit sampling?
Which of the following is a 'Type 1' error in audit sampling?
Answer options:
A.
Risk of incorrect acceptance.
B.
Risk of assessing control risk too low.
C.
Risk of incorrect rejection.
D.
Risk of non-sampling error.
How to approach this question
Type 1 = Reject Good (Efficiency). Type 2 = Accept Bad (Effectiveness).
Full Answer
C.Risk of incorrect rejection.✓ Correct
Risk of incorrect rejection.
The risk of incorrect rejection (substantive) or assessing control risk too high (controls) is a Type 1 error. It affects the efficiency of the audit because the auditor will perform unnecessary additional work.
Common mistakes
Confusing Type 1 and Type 2.
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