Which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of several unusually large 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

By stratifying the cash disbursements population so that the unusually large disbursements are selected, the auditor can ensure that those transactions are included in the sample, which will help them obtain a representative sample and reduce the risk of a material misstatement. Option A, setting the tolerable misstatement at a lower level than originally planned, is not necessary if the auditor can select a representative sample by stratifying the population. Option C, increasing the sample size to reduce the effect of the unusually large disbursements, is not necessary if the auditor can select a representative sample by stratifying the population. Option D, continuing to draw new samples until all the unusually large disbursements appear in the sample, is not an efficient use of audit time and resources.

Which of the Following Courses of Action Would an Auditor