An auditor is using audit sampling to test transactions in the acquisition and payment cycle. She would normally set the tolerable exception rate at what level?
A) Low
B) Medium
C) High
D) Indeterminate

Question

Quizplus · Accepted Answer

The tolerable exception rate is the maximum rate of errors or exceptions that the auditor is willing to accept without modifying their opinion on the accuracy of the financial statements. In the acquisition and payment cycle, the risk of fraud and financial misstatement is typically high, so the auditor would set the tolerable exception rate at a low level to minimize the risk of undetected errors or fraud.

An Auditor Is Using Audit Sampling to Test Transactions in the Acquisition