The Two Most Important Factors When Determining the Appropriate Sample

question 122

True/False

The two most important factors when determining the appropriate sample size in an audit are the auditor's expectation of misstatements and the objectivity of the evidence.

---

Definitions:

Posterior Probabilities

The probabilities of possible outcomes updated on the basis of new evidence or information.

Expected Monetary Value

The predicted value of a financial opportunity when accounting for all possible outcomes and their probabilities.

Optimal Act

The best possible action or decision, typically the one that maximizes the expected outcome or utility.

Bayesian Statistics

A statistical method that applies probability to statistical problems, focusing on the posterior distribution of parameters by incorporating prior knowledge.