[Anonymous]

I have posted this a few days ago, but the my chart format is messed up when I posted it so the question didn’t even make sense. So let me retry this, and thanks again ahead of time.

1. What is the effect on sample size(increase or decrease) when you have an increase in risk of incorrect acceptance?

2. What is the effect on sample size(increase or decrease)when you have an increase in risk of incorrect rejection?

The answer is decrease in both cases. Can anybody explain?

[Zaq]

Think of the phrase “increase risk”. Why would anyone want to increase their risk?

This is normally because internal control is good and thus the amount of work an auditor has to put it is less.

In both cases, your risk is increasing. And your risk is increasing because your sample size is decreasing. The two have an inverse relationship.

You're focusing on the terms “incorrect acceptance” and “incorrect rejection”. But I believe it ultimately boils down that the higher amount of risk you are willing to take, the smaller your sample size will be.

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[Anonymous]

Thank you!!

[Author]

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