The risk the auditor is willing to take of accepting a balance as correct when the true error in the balance is greater than the tolerable misstatement is:
A) the lower bound.
B) the tolerable risk.
C) the upper bound.
D) the allowable risk of incorrect acceptance.

Question

Quizplus · Accepted Answer

The allowable risk of incorrect acceptance is the risk the auditor is willing to take of accepting a balance as correct when the true error in the balance is greater than the tolerable misstatement. It represents the maximum risk that the auditor has determined to be acceptable in order to achieve the desired level of audit assurance. Therefore, option D is the correct answer.

The Risk the Auditor Is Willing to Take of Accepting