The auditor tested a sample of recorded sales invoices for evidence of credit approval.Based on the results of the sample,the auditor concluded that there was a satisfactory rate of approvals.Unknown to the auditor,credit approvals in the population were not satisfactory.This would be an example of:
A)Risk of overreliance.
B)Risk of underreliance.
C)Risk of incorrect acceptance.
D)Risk of incorrect rejection.

Question

Quizplus · Accepted Answer

The situation described is an example of the risk of overreliance, where the auditor incorrectly concludes that controls are effective based on the sample, while in reality, they are not effective in the population.

The Auditor Tested a Sample of Recorded Sales Invoices for Evidence