If the projected misstatement is greater than the tolerable misstatement,the auditor must
A)give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is greater than the tolerable misstatement
B)give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is less than the tolerable misstatement
C)gather additional evidence to determine the amount of the material misstatement
D)gather additional evidence to determine the amount of the actual tolerable misstatement

Question

Quizplus · Accepted Answer

If the projected misstatement is greater than the tolerable misstatement, the auditor cannot conclude that the financial statements are fairly stated. In this case, the auditor is required to gather additional evidence to determine the amount of the material misstatement. This may involve obtaining more reliable evidence, obtaining additional evidence or both. The auditor may also need to reassess the risk of material misstatement and modify the audit plan accordingly. Option A and B are not correct as they do not address the need for additional evidence. Option D is also not correct as it suggests gathering additional evidence to determine the amount of the actual tolerable misstatement, which is not necessary as the tolerable misstatement is a predetermined amount agreed upon by the auditor and management.

If the Projected Misstatement Is Greater Than the Tolerable Misstatement,the