Required sample size increases as the auditor's tolerable misstatement for an account balance or class of transactions decreases.

Question

Quizplus · Accepted Answer

This statement is true. As the auditor's tolerable misstatement decreases, the auditor will need a larger sample size to achieve a similar level of confidence in their audit results. This is because the auditor will need to examine a larger portion of the population to detect smaller levels of misstatement.

Required Sample Size Increases as the Auditor's Tolerable Misstatement for an Account