In which of the following cases would the auditor be most likely to conclude that all of the items in an account under consideration should be examined rather than tested on a sample basis?
A) Tolerable deviation is large and expected deviation is low.
B) Tolerable deviation is small and expected deviation is high.
C) Tolerable deviation is large and expected deviation is high.
D) Tolerable deviation is small and expected deviation is low.

Question

Quizplus · Accepted Answer

When the tolerable deviation is small and expected deviation is high, it indicates a higher risk of misstatement, and therefore the auditor would be more likely to conclude that all items in the account should be examined rather than testing on a sample basis. This ensures a higher level of assurance in detecting any potential errors or fraud.

In Which of the Following Cases Would the Auditor Be