The deviation rate the auditor will permit in the population and still be willing to use the assessed level of control risk established during planning is called the:
A) sample deviation rate (SDR).
B) estimated population deviation rate.
C) acceptable risk of overreliance (ARO).
D) tolerable deviation rate (TDR).

Question

Quizplus · Accepted Answer

The deviation rate that the auditor will permit in the population is called the tolerable deviation rate (TDR). The TDR is set during planning and is used to determine the sample size necessary to achieve a desired level of assurance. The auditor will only use the assessed level of control risk established during planning if the deviation rate in the sample is below the TDR. This ensures that the risk of overreliance is kept within an acceptable limit. The acceptable risk of overreliance (ARO) is related to the TDR but is a separate concept. The estimated population deviation rate is simply the auditor's best guess as to the rate of deviations in the population. The sample deviation rate (SDR) is the actual observed rate of deviations in the sample.

The Deviation Rate the Auditor Will Permit in the Population