You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of
A) incorrect acceptance.
B) incorrect rejection.
C) control risk too low.
D) control risk too high.

Question

Quizplus · Accepted Answer

When the auditor incorrectly rejects the account as materially misstated, it is known as incorrect rejection or Type I error. This can happen if the sample results are not representative of the entire population or if the auditor places too much reliance on the sample results. It is a risk that the auditor should aim to minimize.

You Are Auditing Nelson and Company and Determined That the Sample