In planning a statistical sample for a test of controls,an auditor increased the expected population deviation rate from the rates observed in prior audits because of the results of prior tests of controls and the overall control environment.The auditor most likely would then increase the planned:
A)Tolerable rate of deviation.
B)Allowance for sampling risk.
C)Risk of overreliance.
D)Sample size.

Question

Quizplus · Accepted Answer

If the auditor has increased the expectation of population deviation rate, it implies that the auditor expects to find more errors in the sample. To overcome this, the auditor will increase the sample size (i.e., number of items selected from the population). Therefore, the auditor will increase the planned sample size to achieve the desired level of assurance. Increasing tolerable rate of deviation or allowance for sampling risks doesn't make sense as it would compromise the quality of audit evidence. Similarly, increasing risk of overreliance would mean accepting a higher level of risk, which is not desirable. Hence, the best choice is to increase the sample size.

In Planning a Statistical Sample for a Test of Controls,an