Risk of incorrect rejection definition
/What is the Risk of Incorrect Rejection?
The risk of incorrect rejection arises when a sample indicates that there is a risk of material misstatement when this is not actually the case. This occurs when the items selected in a sample are not truly representative of the population being tested. It comes from the possibility that a sample selection might contain proportionately more or less of a misstatement or deviation than exists in the population as a whole.
An auditor encountering this issue will expand the sample size or engage in other testing, though doing so reduces the efficiency of the audit work. This risk is a particular concern when the cost or difficulty of obtaining additional audit evidence is high.