In PPS Sampling Plans, Tolerable Misstatement

question 65

Multiple Choice

In PPS sampling plans, tolerable misstatement:

• A) is stated as a percentage.
• B) has an inverse effect on sample size.
• C) is equal to materiality at the financial statement level.
• D) is normally set at zero.
• E) is the minimum misstatement that can exist in an account before it is considered to be materially misstated.

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Definitions:

Insurer

An entity which provides insurance is responsible for compensating its clients against losses from certain specified risks.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is able to make decisions that impact another party (the principal), potentially leading to conflicts of interest.

Ownership

The act, state, or right of possessing something.

Control

The exercise of authoritative or regulatory influence over something or someone to guide or manage operations and behaviors.