Which of the following represents the best description of the tolerable exception?
A)The highest exception rate the auditor will permit in the control being tested and still conclude it is operating effectively
B)The highest exception rate the auditor expects to find in the population
C)The number of exceptions found in the sample divided by the sample size
D)The highest estimated exception rate in a population at a given EPER

Question

Quizplus · Accepted Answer

The tolerable exception is the highest exception rate the auditor will allow in the control being tested and still conclude it is operating effectively. This threshold is set by the auditor based on professional judgment and may vary depending on the risk assessment of the control and the materiality of the related account balance or financial statement assertion. Option B refers to the expected rate of exceptions, which may be used to determine the sample size for auditing procedures. Option C represents the sample exception rate, while Option D refers to the estimated exception rate in the population based on the auditor's understanding of the control environment and testing results.

Which of the Following Represents the Best Description of the Tolerable