Sample Risk: What is a Type 1 Error (False Rejection)?

Type 1 errors relate to Efficiency— The auditor will probably achieve the appropriate conclusions, although not in the most efficient manner (perhaps taking more than one sample, maybe at the urging of the client who has faith in the effectiveness of the internal control or the fairness of the financial statement element). *** 1. Tests of controls => the risk of under-reliance on internal controls (also known as risk of assessing control risk too high). 2. Substantive testing => the risk of incorrect rejection.