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I found this MCQ in the Kaplan revision book & am not convinced with the answer:
Q. Which of the following amendments to the audit approach would reduce detection risk?
A. Decrease in sample size
B. Decrease the materiality level
C. Decrease supervisionAnswer provided:
B. Decrease the Materiality Level.
Increasing sample sizes increasing supervision would decrease detection risk.Question to Tutor: Can you explain how increasing materiality level would reduce detection risk?
Descreasing the materiality level would mean, for example, noting errors that were >$10,000 rather than simply errors greater than >$20,000.
By decreasing the materiality level you look at more items and so reduce detectoin risk.
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