Question

In audit sampling, the risk of incorrect rejection is best described as?

1) concluding that an internal control that is properly designed and operating effectively cannot be relied upon.
2) reliance on an internal control when a material error exists.
3) the sample not being representative of the population from which it was drawn.
4) a mistake or failure of the auditor in the application of the sampling plan or in the analysis of sample results.

Answer 1

The risk of incorrect rejection in audit sampling is best described as a mistake or failure of the auditor in the application of the sampling plan or in the analysis of sample results.

Step-by-step explanation:

In audit sampling, the risk of incorrect rejection refers to the possibility of a mistake or failure of the auditor in the application of the sampling plan or in the analysis of sample results. This means that the auditor may make an error in concluding whether a control is properly designed and operating effectively, or in relying on an internal control despite the presence of a material error. The other options mentioned, such as the sample not being representative of the population or the reliance on an internal control in the presence of a material error, refer to other aspects of audit sampling but do not specifically describe the risk of incorrect rejection.