How Does the Auditor Establish the Level of Tolerable Misstatement

question 68

Multiple Choice

How does the auditor establish the level of tolerable misstatement in a variables sampling application?

• A)Based on prior assessments of audit risk,risk of material misstatement,and analytical procedures risk.
• B)Based on the recorded amount of the account balance as well as the relationship of the account balance with important financial statement subtotals.
• C)Based on the findings in prior audits or based on a small sample taken during the current year.
• D)Based on the anticipated cost of conducting additional substantive procedures.

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Definitions:

Primary Sex Characteristics

The physical features that are directly involved in human reproduction, including genital organs.

Binary

Relating to, composed of, or involving two things; in computing, represents data using two symbols, typically 0 and 1.

Xy Sex Chromosomes

The combination of chromosomes typically found in males, determining male biological characteristics.

Internal Testes

refers to a condition where the testicles do not descend into the scrotum and remain within the abdomen, which can affect fertility and hormone production.