When the computed upper exception rate is greater than the tolerable exception rate, it is necessary for the auditor to take specific action.Which of the following courses of action would be most difficult to justify?
A)Reduce the tolerable exception rate so as to accept the sample results.
B)Expand the sample size and perform more tests.
C)Revise the assessed control risk.
D)Write a letter to management which outlines the control deficiencies.

Question

Quizplus · Accepted Answer

Reducing the tolerable exception rate is not an appropriate course of action and is difficult to justify as it means lowering the overall level of assurance obtained from the audit. The tolerable exception rate is typically set based on professional judgment, risk assessment, and materiality considerations, and should not be compromised in response to adverse findings. Instead, the auditor should consider other options such as increasing the sample size, revising the assessed control risk, or communicating the control deficiencies to management.

When the Computed Upper Exception Rate Is Greater Than the Tolerable