When testing controls,the tolerable error is:
A)the minimum rate of deviation that an auditor will accept
B)the tolerable rate of deviation that an auditor will accept before concluding that a control is ineffective
C)the tolerable rate of deviation that an auditor will accept before concluding that a control is effective
D)the maximum amount of error in an account balance that an auditor will accept before concluding that an account is materially misstated

Question

Quizplus · Accepted Answer

Tolerable error refers to the maximum rate of deviation from a control that an auditor can accept and still conclude that the control is effective. Therefore, option B is the correct choice. Option A refers to the acceptable deviation rate, not the tolerable error rate. Option C is the opposite of the correct choice since it indicates that an auditor would conclude a control is effective even if there are significant deviations. Option D refers to the materiality threshold for account balances, which is not related to testing controls.

When Testing Controls,the Tolerable Error Is