Morning Of Test Flashcards
(1 cards)
As the acceptable level of detection risk increases, an auditor may:
Select a smaller sample size.
Because In simple terms, detection risk is the chance that an auditor fails to detect a misstatement in the financial records. If an auditor accepts a higher detection risk, it means they don’t need as much assurance from their testing.
The correct answer is C: Select a smaller sample size, because:
- Higher detection risk means the auditor can afford less rigorous testing.
- Since they are okay with a higher chance of missing errors, they don’t need as large of a sample to check.
- They may also use less detailed audit procedures.
Think of it like checking homework: If you trust that most answers are correct, you only spot-check a few rather than reviewing every single answer.
