If the risk of material misstatement is low and detection risk is high _______.
A)then a smaller sample size should be selected
B)then a larger sample size should be selected
C)then control risk should be assessed as high
D)the auditor should consider outsourcing the audit work to the internal audit function

Question

Quizplus · Accepted Answer

If the risk of material misstatement is low and detection risk is high, this indicates that the auditor is relying more on substantive procedures to detect any potential misstatements. However, with a high detection risk, there is a greater likelihood that the auditor may not detect any potential misstatements even though they are present (i.e. false negative). To reduce this risk, the auditor can increase the sample size, which would increase the detection risk.

If the Risk of Material Misstatement Is Low and Detection