Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The auditor checks the company's financial statements using sampling. There are 100 sales transactions made by the company. Of the 100 transactions, materiality is set

The auditor checks the company's financial statements using sampling. There are 100 sales transactions made by the company. Of the 100 transactions, materiality is set at 5% or 5 transactions. The auditor took a sample of 40 transactions, and it turns out that of the 40 transactions examined, there were no deviations found. Based on the results of the sampling inspection, the auditor concluded that there was no material misstatement. When in fact, of the 100 transactions there were 10 transactions that occurred irregularities or errors, it's just a coincidence that the ten transactions were not taken in the sample. What we called the risk involved in this case example? Explain your answer!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Audit The Process Based QMS

Authors: Arter, Dennis R., Cianfrani, Charles A, And West, John E., 'Jack'

2nd Edition

ISBN: 0873898443, 978-0873898447

More Books

Students also viewed these Accounting questions