The exception rate that the auditor will permit in the population and still be willing to use the preliminary control risk assessment is called the
A) acceptable exception rate.
B) estimated population exception rate.
C) sample exception rate.
D) tolerable exception rate.

Question

Quizplus · Accepted Answer

The tolerable exception rate is the maximum exception rate that the auditor is willing to accept in the population while still being willing to rely on the preliminary control risk assessment. This is the rate at which the auditor believes the control is effective enough to prevent material misstatements in the financial statements. Therefore, the answer is D – tolerable exception rate. The other options, acceptable exception rate, estimated population exception rate, and sample exception rate, may be relevant to audit procedures but are not specifically related to the auditor's decision-making regarding the control risk assessment.

The Exception Rate That the Auditor Will Permit in the Population