The basic allowance for sampling risk should only be calculated if the auditor identifies a misstatement.

Question

Quizplus · Accepted Answer

The basic allowance for sampling risk should always be calculated by the auditor, regardless of whether or not a misstatement has been identified. This is because sampling risk is an inherent risk associated with a statistical sampling approach, and represents the risk that the sample selected may not be representative of the population as a whole. By calculating the basic allowance, the auditor can ensure that they have accounted for this risk in their sampling approach.

The Basic Allowance for Sampling Risk Should Only Be Calculated