The allowable risk of overreliance (ARO) has a significant effect on sample size. The relationship of ARO to sample size is:
A) nonexistent.
B) inverse (larger ARO = smaller sample).
C) variable (sometimes larger, sometimes smaller).
D) direct (larger ARO = larger sample).

Question

Quizplus · Accepted Answer

The allowable risk of overreliance (ARO) is inversely related to sample size. A larger ARO means the auditor is willing to accept a higher risk of relying on a control that may not be effective, which allows for a smaller sample size.

The Allowable Risk of Overreliance (ARO) Has a Significant Effect