Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

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Acceptable risk of incorrect rejection is also known as Type I Error or alpha risk. It refers to the risk that the auditor may wrongly assess the population as materially misstated when in reality it is not. An auditor sets a benchmark for acceptable risk of incorrect rejection, which helps in determining the sample size and the extent of testing.

Acceptable Risk of Incorrect Rejection Is the Statistical Risk That