How does auditor determine the tolerable misstatement rate

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Reference no: EM131031706

Answer the following problems

1. It seems from the discussion in the book that positive confirmations are more useful in detecting misstatements. Do you think there are any instances when negative confirmations are justified? When? What are the benefits of negative confirmation? Are these benefits worth the costs?

2. How does the auditor determine the tolerable misstatement rate? What factors affect that determination? What are the consequences of increasing (decreasing) the tolerable misstatement?

3. Why is this step very important in auditing? What information can these misstatements provide when analyzed?

Reference no: EM131031706

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