The risk which the auditor is willing to take of accepting a control as being effective when it is not is the:
A) allowable risk of overreliance (ARO).
B) tolerable deviation rate (TDR).
C) sample deviation rate (SDR).
D) estimated population deviation rate.

Question

Quizplus · Accepted Answer

Allowable risk of overreliance (ARO) is the risk that the auditor is willing to take of accepting a control as being effective when it is actually not. Tolerable deviation rate (TDR) is the maximum rate of deviation from a control that the auditor is willing to accept. Sample deviation rate (SDR) is the actual rate of deviation found in the sample. Estimated population deviation rate is the auditor's expectation of the rate of deviation in the entire population based on the sample taken. Therefore, the best choice is A - allowable risk of overreliance (ARO), as it specifically relates to the risk the auditor is willing to take in accepting a control as effective.

The Risk Which the Auditor Is Willing to Take of Accepting