The tolerable deviation rate (TDR)has a significant effect on sample size.The relationship of TDR to sample size is:
A) inverse (larger TDR = smaller sample).
B) direct (larger TDR = larger sample).
C) variable (sometimes larger, sometimes smaller).
D) not determinable.

Question

Quizplus · Accepted Answer

The tolerable deviation rate (TDR) refers to the maximum rate of occurrence of errors or mistakes that the auditor considers acceptable. The higher the TDR, the larger the sample size required as the auditor needs to be more assured that the population is not materially misstated. Therefore, there is an inverse relationship between TDR and sample size. As TDR increases, the auditor needs to reduce the risk of failing to detect a material misstatement, hence the need for a larger sample size.

The Tolerable Deviation Rate (TDR)has a Significant Effect on Sample