Tolerable misstatement is the maximum amount of misstatement the auditor can accept in the population without requiring an audit adjustment or a qualified audit opinion.

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This statement is true. Tolerable misstatement is a term used in auditing to determine the maximum amount of misstatement that can be allowed in the financial statements without triggering an audit adjustment or a qualified opinion. The auditor sets a tolerable misstatement threshold based on the level of risk and materiality of the financial statement elements. If the actual misstatement exceeds the tolerable misstatement, the auditor must take appropriate actions such as adjusting the financial statements or issuing a qualified opinion.

Tolerable Misstatement Is the Maximum Amount of Misstatement the Auditor