Day: June 4, 2026

When determining a sample size for tests of controls, an auditor should consider several factors.

For the factor below, select whether it would cause the same size to increase, decrease, have no impact or to have only a negligible effect.

• An increase in tolerable misstatement

Select ONE answer:

1. Decrease
2. Have only a negligible effect
3. Increase
4. Has no impact

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – An increase in tolerable misstatement will cause a decrease in sample size, as an increase in the amount of ‘acceptable misstatements’ (or audit risk acceptable) will reduce the extent of the work necessary to be performed (as there is a corresponding acceptable increase in detection risk).
2. Not correct
3. Not correct
4. Not correct

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