Final answer:
Factors that affect the auditor's use of a lower percentage for tolerable misstatement include a smaller error bound, lower sampling error, and a decreased allowable error bound.
Step-by-step explanation:
Factors that would cause the auditor to use a lower percentage for tolerable misstatement include a smaller error bound, lower sampling error, and a decreased allowable error bound.
For example, if the auditor wants a smaller error bound while keeping the same level of confidence, they can increase the sample size in the study before it is done. This will result in a lower percentage for tolerable misstatement as the auditor will have a more accurate representation of the population.
The ±3 percent in the given sampling error represents the range within which the actual value may deviate from the estimated value obtained from the sample. It implies that there is a 95% confidence level that the true population parameter lies within the range of ±3 percent of the estimated value.