What is a strategy to address increased risk during an audit?

Increasing sample sizes is a strategy designed to address heightened risk during an audit by enhancing the reliability of the audit evidence obtained. When auditors encounter situations where the assessed risk is elevated—perhaps due to concerns about the effectiveness of internal controls, prior misstatements, or instances of fraud—the auditor may determine that a larger sample size is necessary. This approach is grounded in the principle of obtaining sufficient appropriate audit evidence to reduce audit risk to an acceptable level.

By increasing sample sizes, auditors can increase their confidence that the results of testing are representative of the entire population, thereby helping to ensure that the conclusions drawn from the audit work are well-supported and reliable. Inherent risks, control risks, or detection risks can compromise the quality of the audit; thus, larger samples can mitigate these risks effectively by providing a more comprehensive view of the population being tested.

Other strategies such as reducing sample sizes, increasing materiality thresholds, or relying more heavily on management representations would not align with the principles of addressing increased risk. Reducing sample sizes or increasing materiality thresholds could potentially limit the auditor's ability to detect misstatements, while placing undue reliance on management representations may overlook the need for independent verification and assessment of the assertions made by management, which is especially crucial in higher