Discuss AICPA CPA-Auditing Exam Topic 1 Question 81

When planning a sample for a substantive test of details, an auditor should consider tolerable misstatement for the sample. This consideration should:

ABe related to the auditor's business risk.

BNot be adjusted for qualitative factors.

CBe related to preliminary judgments about materiality levels.

DNot be changed during the audit process.

Suggested Answer: C

Choice 'c' is correct. Tolerable misstatement is the maximum monetary misstatement in an account balance that may exist without causing the financial statements to be materially misstateD. Tolerable misstatement is a planning concept related to the auditor's preliminary judgments about materiality levels.

Choice 'a' is incorrect. The auditor's overall business risk is not related to the tolerable misstatement used in planning a sample for a substantive test of details.

Choice 'b' is incorrect. The tolerable misstatement should be adjusted for both qualitative and quantitative factors.

Choice 'd' is incorrect. The auditor should modify his or her consideration of tolerable misstatement if, during the audit process, information used to determine the initial level of tolerable misstatement changes.

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23 comments · newest first

Narcisa 11 months ago

Wait, are we really saying it shouldn't change during the audit? That seems off.

Brianne 11 months ago

Totally agree, business risk plays a huge role here!

Catarina 11 months ago

Not sure about that, can it really not be adjusted for qualitative factors?

Effie 11 months ago

I think it should definitely relate to materiality levels.

Jaime 11 months ago

Tolerable misstatement is key for sample planning!

Marion 12 months ago

I vaguely remember that tolerable misstatement can change during the audit process, so I don't think option D is correct.

Viva 12 months ago

I’m a bit confused about whether business risk plays a role here. I feel like it might, but I can't recall the specifics.

Sheridan 12 months ago

I remember practicing a question where we discussed how qualitative factors could impact tolerable misstatement, so I'm leaning towards option C.

Paola 1 year ago

I think tolerable misstatement should definitely relate to preliminary judgments about materiality levels, but I'm not entirely sure.

Tawny 1 year ago

Wait, I'm confused. Is tolerable misstatement supposed to be related to business risk or materiality? And can it be adjusted or not? I need to think this through more carefully.

Nell 1 year ago

Okay, I've got this. Tolerable misstatement should be based on the auditor's preliminary judgments about materiality levels, not just their overall business risk. And it can be adjusted during the audit process as needed. I feel confident I can answer this correctly.

Lamar 1 year ago

Hmm, I'm a bit unsure about this one. I know tolerable misstatement is important for sample planning, but I can't quite recall how it's supposed to be determined. I'll have to review my notes on that.

Veronika 1 year ago

This seems like a straightforward question about audit sampling. I'll need to remember that tolerable misstatement should be related to preliminary materiality judgments, not just the auditor's business risk.

Kimbery 1 year ago

Okay, I've got this. Elliptic curve cryptography (ECC) is an asymmetric encryption standard, so that's the one I'll select for this IoT application.

Jordan 1 year ago

Hmm, I'm a bit unsure about this one. The options seem pretty similar, and I'm not sure if identifying delays is the same as prioritizing them. I'll have to think this through carefully.

Gladys 1 year ago

Okay, let's see here. I think the key is to combine the two ISO images into a single local repository, and then set the publisher and other properties correctly. I'll need to pay close attention to the details.

Domitila 1 year ago

I'm feeling a bit lost on this one. There are a few different tools listed, and I'm not sure which one would be the most appropriate for the situation described. I'll need to think it through carefully.

Virgie 2 years ago

I see your point, Graciela. Keeping it consistent throughout the audit process is important.

Graciela 2 years ago

I think the tolerable misstatement should not be adjusted for qualitative factors, to maintain consistency.

Ashlyn 2 years ago

That's a good point, Sunny. Materiality levels can impact the tolerable misstatement.

Sunny 2 years ago

I believe it should also be related to preliminary judgments about materiality levels.

Virgie 2 years ago

I agree with Ashlyn, considering the business risk is crucial in determining the sample size.

Ashlyn 2 years ago

I think the tolerable misstatement for the sample should be related to the auditor's business risk.

AICPA CPA-Auditing Exam - Topic 1 Question 81 Discussion