Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?
A)The auditor would be exposed to the risk of incorrect rejection.
B)The auditor would be exposed to an efficiency loss.
C)The auditor would consider expanding the sample to evaluate additional transactions or components of the account balance.
D)The auditor would conclude that the account balance is fairly stated.

Question

Quizplus · Accepted Answer

When the upper limit on misstatement exceeds the tolerable misstatement, it means that the auditor has identified a level of misstatement that is unacceptable. Therefore, it is unlikely that the auditor would conclude that the account balance is fairly stated (option D). The auditor would need to take further steps such as considering expanding the sample to evaluate additional transactions or components of the account balance (option C) and being exposed to the risk of incorrect rejection (option A). Option B (being exposed to an efficiency loss) may also occur but is less significant than the other options.

Which of the Following Is the Least Likely Outcome When