Lesson: Tolerable Misstatement in Sampling

This lesson delves into the concept of tolerable misstatement in sampling and its significance in auditing. It explores how the tolerable misstatement is used to quantify an acceptable level of error in a population, and its relation to audit risk, detection risk, control risk, and inherent risk. The lesson also explains the factors that an auditor considers in determining a tolerable misstatement appropriate for the population. Additionally, the connection between the tolerable misstatement and sample size is discussed, highlighting the inverse relationship between the two. Finally, the lesson touches upon the importance of considering an acceptable rate of deviation for attribute sampling and variable sampling in the context of tolerable misstatement.