The risk which the auditor is willing to take in accepting a control as being effective when the true population exception rate is greater than a tolerable rate is the:
A) finite correction factor.
B) tolerable exception rate.
C) acceptable risk of assessing control risk too low.
D) estimated population exception rate.

Question

Quizplus · Accepted Answer

The acceptable risk of assessing control risk too low is the risk that the auditor is willing to accept of concluding that the control is effective when it actually has exceptions. This risk is influenced by the tolerable exception rate, which is the maximum rate of exceptions that the auditor is willing to accept without modifying their opinion on the financial statements, and the estimated population exception rate, which is the auditor's expectation of the actual exception rate in the population. The finite correction factor is used when projecting the results of a sample to the entire population.

The Risk Which the Auditor Is Willing to Take in Accepting