When the computed upper deviation rate is greater than the tolerable deviation rate, it is necessary for the auditor to take specific action. Which of the following courses of action would be most difficult to defend if the auditor is ever subject to review by a court?
A) Revise and relax the tolerable deviation rate (TDR) or the acceptable risk of assessing control risk too low (ARO).
B) Write a letter to management.
C) Expand the sample size.
D) Revise the assessed control risk.

Question

Quizplus · Accepted Answer

It would be difficult to defend revising and relaxing the tolerable deviation rate or acceptable risk of assessing control risk too low as it may be seen as compromising the quality of the audit and avoiding the need to take necessary actions. The other options (writing a letter to management, expanding the sample size, and revising the assessed control risk) are all acceptable courses of action that do not compromise the quality of the audit.

When the Computed Upper Deviation Rate Is Greater Than the Tolerable