The allowable risk of overreliance (ARO)has a significant effect on sample size.The relationship of ARO to sample size is:
A) variable (sometimes larger, sometimes smaller).
B) nonexistent.
C) inverse (larger ARO = smaller sample).
D) direct (larger ARO = larger sample).

Question

Quizplus · Accepted Answer

A larger allowable risk of overreliance (ARO) means that the auditor is willing to accept a higher risk of material misstatement in the population. Therefore, a smaller sample size is needed to achieve the desired level of assurance. As a result, the relationship between ARO and sample size is inverse.

The Allowable Risk of Overreliance (ARO)has a Significant Effect on Sample