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:

Erik Erikson

A psychologist known for his theory on the psychological development of human beings across eight stages of life.

Productive

Being capable of or successful in producing a desired result, outcome, or a significant amount of goods or work.

Personality Dimension

A broad, underlying trait or component that captures a significant aspect of an individual's personality, such as openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Openness

A personality trait characterized by an appreciation for new experiences, creativity, curiosity, and a willingness to explore novel ideas and values.