The amount by which a projected misstatement in an account balance or class of transactions differs from an actual misstatement as a result of the sample not being representative of the population would typically arise from
A) a misunderstanding of accounting principles.
B) sampling risk.
C) management override of an internal control policy or procedure.
D) risk of incorrect acceptance.

Question

Quizplus · Accepted Answer

The amount by which a projected misstatement in an account balance or class of transactions differs from an actual misstatement as a result of the sample not being representative of the population is known as sampling risk. It is the risk that the sample is not an accurate representation of the entire population and therefore, the results obtained from the sample cannot be relied upon to represent the actual population. Sampling risk is one of the inherent risks of auditing and can be reduced by increasing the sample size or by selecting a more representative sample.

The Amount by Which a Projected Misstatement in an Account