CPA Study Group
i’m not really sure why tolerable exception rate is inversely related to sample size…
Lets say for example:
Population of 100 invoices
A) Our tolerable exception rate is 5%. The max amount of misstatements we can accept wile providing an unmodified opinon is 5
B) Our tolerable exception rate is 2%. The max misstatements we’ll accept is 2.
Since our tolerable exception rate decreased, shouldn’t our sample size? It would make more sense to test less things when accepting less misstatements… Or it would have no effect
Anyone want to help me out on what I am missing here… Thanks!