The most common method of associating misstatement assumptions with layers of the computed upper deviation rate in monetary-unit sampling is to associate the largest dollar misstatement percents with the largest layers.

Question

Quizplus · Accepted Answer

This statement is true. The largest dollar misstatements are typically found in the largest layers of monetary-unit sampling, so it makes sense to associate the most conservative misstatement assumptions with those layers. This helps to ensure that the auditor is sufficiently conservative in assessing the risk of material misstatement in those areas with the highest potential impact on the financial statements.

The Most Common Method of Associating Misstatement Assumptions with Layers