When errors are found, a common assumption in practice is to assume:
A) that the population errors are smaller than the sample errors.
B) that the population errors are larger than the sample errors.
C) that misstatements in the unaudited population are proportional to the misstatements in the sample.
D) a 100% assumption for all errors.

Question

Quizplus · Accepted Answer

The assumption that misstatements in the unaudited population are proportional to the misstatements in the sample is a reasonable assumption, as it allows auditors to estimate the total likely misstatement in the population based on the misstatement found in the sample. This assumption is known as the projection assumption, and is based on the concept of sampling risk. While it is not always 100% accurate, it is a practical assumption that can help auditors identify areas of potential risk in the audited population.

When Errors Are Found, a Common Assumption in Practice Is