The risk which the auditor is willing to take in accepting a control as being effective when the true population exception rate is greater than a tolerable rate is the
A) finite correction factor.
B) tolerable exception rate.
C) acceptable risk of overreliance.
D) estimated population exception rate.

Question

Quizplus · Accepted Answer

The acceptable risk of overreliance represents the level of risk that the auditor is willing to take in accepting a control as effective when it's not actually effective. It is determined by considering the tolerable exception rate and the estimated population exception rate. The finite correction factor adjusts the sample size for known problems with the population, while the tolerable exception rate is the maximum rate of deviation that the auditor is willing to accept. The estimated population exception rate is the auditor's best estimate of the population deviation rate.

The Risk Which the Auditor Is Willing to Take in Accepting