When selecting a sampling method, what factor should be considered regarding assessed control risk?

When determining the appropriate sampling method, one essential factor to consider is the assessed control risk. A lower assessed control risk implies a stronger likelihood that the internal controls are functioning effectively. If the control risk is rated lower, auditors can rely more on these controls, which often leads to a focus on ensuring that their sample size suffices to confirm the reliability of those controls.

Using a larger sample size in such situations enhances the auditor's ability to detect any potential errors that may still exist, providing greater assurance about the effectiveness of the controls. This is important because, even with lower control risk, the potential for errors can still exist, so larger samples help enhance the reliability of the conclusions drawn from the audit evidence.

Conversely, if control risk is assessed as high, it generally indicates that internal controls may not be reliable, which can lead auditors to adopt a different approach, such as a smaller sample size or focusing more on substantive testing rather than relying heavily on controls. Thus, the correlation between the level of assessed control risk and sample size is crucial in audit planning and execution.