Which of the following situations will result in the auditors concluding that the risk of material misstatement is too high when using nonstatistical sampling for substantive tests?
A)The projected misstatement exceeds the tolerable misstatement.
B)The allowance for sampling risk exceeds the projected misstatement.
C)The risk of incorrect acceptance exceeds the risk of incorrect rejection.
D)The tolerable misstatement exceeds the sample net misstatement.

Question

Quizplus · Accepted Answer

If the projected misstatement (amount that the auditor expects to exist in the population based on the sample results) exceeds the tolerable misstatement (a materiality threshold set by the auditor), then the risk of material misstatement is too high and the auditor cannot rely on nonstatistical sampling results. This is because the auditor cannot be confident that any remaining misstatements in the population are below the tolerable misstatement level.

Which of the Following Situations Will Result in the Auditors