Walter Polonia was explaining to his junior staff the implications of sampling risk when conducting substantive testing. He made the following two statements:
Which statements, if any, were true?
A) (i) only
B) (ii) only
C) both (i) and (ii)
D) neither (i) or (ii)

Question

Quizplus · Accepted Answer

Statement (ii) is true because decreasing the acceptable level of sampling risk and increasing the planned level of substantive testing will both decrease the risk of incorrect acceptance (Type II error) and the overall audit risk. However, statement (i) is false because increasing the sample size alone will not necessarily decrease the sampling risk. The sample size needs to be determined based on factors such as the level of risk, materiality, expected error rate, and reliability of the underlying data, among others.

Walter Polonia Was Explaining to His Junior Staff the Implications