Which of the following set of conditions would provide the auditor with the smallest sample size under monetary unit sampling (RIA = risk of incorrect acceptance,EM = expected misstatement,TM = tolerable misstatement,PS = population size)?
A) RIA = 5%, EM = $7,500, TM = $15,000, PS = $150,000
B) RIA = 5%, EM = $5,000, TM = $10,000, PS = $200,000
C) RIA = 5%, EM = $2,000, TM = $10,000, PS = $100,000
D) RIA = 5%, EM = $7,500, TM = $15,000, PS = $300,000

Question

Quizplus · Accepted Answer

The sample size in monetary unit sampling is determined by the equation: Sample Size = (PS * TM) / EM. Therefore, to obtain the smallest sample size, we need to have a lower expected misstatement and a higher population size. Additionally, maintaining the RIA and TM values equal across all options, option C has the lowest expected misstatement of $2,000 and the population size of $100,000 which would lead to the smallest sample size.

Which of the Following Set of Conditions Would Provide the Auditor