During the final planning of the accounts receivable plan a CPA specified a tolerable misstatement of $30,000,instead of the $20,000 contained in the preliminary audit plan.What would be the impact of this change?
A)A decrease in population standard deviation.
B)An increase in sample standard deviation.
C)An increase in required sample size.
D)A decrease in the required sample size.

Question

Quizplus · Accepted Answer

The change in the tolerable misstatement from $20,000 to $30,000 would result in a decrease in the required sample size. A higher tolerable misstatement amount means the auditor can tolerate a higher level of misstatement in the sample, resulting in a smaller sample size needed to achieve the desired level of assurance. Therefore, the required sample size would decrease.

During the Final Planning of the Accounts Receivable Plan a CPA