Which of the following courses of action would an auditor who is aware of several unusually large cash disbursements most likely follow in planning a sample of cash disbursements?
A) Set the tolerable misstatement at a lower level than originally planned.
B) Stratify the cash disbursements population so that the unusually large disbursements are selected.
C) Increase the sample size to reduce the effect of the unusually large disbursements.
D) Continue to draw new samples until all the unusually large disbursements appear in the sample.

Question

Quizplus · Accepted Answer

Stratifying the cash disbursements population allows the auditor to select a sample that includes the unusually large disbursements, which could be indicative of fraud or error. This increases the likelihood of detecting significant misstatements. Setting a lower tolerable misstatement level or increasing the sample size may not necessarily address the issue of the unusually large disbursements. Continuously drawing new samples until all the unusually large disbursements appear is not efficient and may not provide a representative sample of the population.

Which of the Following Courses of Action Would an Auditor