Final answer:
For attributes sampling, an auditor can adjust the tolerable deviation rate and the expected deviation rate to reflect the importance of the control, influencing the sample size required to achieve a certain confidence level.
Step-by-step explanation:
For attributes sampling in auditing, of the three factors that enter into sample size determination, the two factors that an auditor can adjust to reflect the importance of the control are 1) Tolerable deviation rate and 2) Expected deviation rate. The auditor cannot change the population size, as it is a given based on the actual number of transactions or data points. However, the tolerable deviation rate represents the highest deviation level from prescribed controls that the auditor is willing to accept before concluding that the control is not effective, and it can be set lower or higher depending on the importance of the control. Similarly, the expected deviation rate is based on the auditor's estimation or prior experience and can be higher or lower, reflecting how often the auditor expects deviations from the prescribed control procedures to occur.
The desired confidence level is also adjustable and refers to the probability that the auditor's conclusions drawn from the sample are a correct representation of what exists within the entire population. The auditor may choose a higher confidence level for more important controls, requiring a larger sample size.
Variations in these factors will influence the size of the sample that the auditor will select for testing. Lower tolerable and expected deviation rates and higher confidence levels generally lead to larger sample sizes. Adjusting these factors is a matter of professional judgment and depends on the specific circumstances of the audit engagement.