The audit team will choose to reduce the reliance on controls if the ___________________ is greater than the ___________________________.
A) Tolerable rate of deviation; upper limit rate of deviation.
B) Upper limit rate of deviation; tolerable rate of deviation.
C) Expected rate of deviation; tolerable rate of deviation.
D) Tolerable rate of deviation; expected rate of deviation.

Question

Quizplus · Accepted Answer

The upper limit rate of deviation represents the maximum rate of deviation that the auditor can tolerate without modifying their planned reliance on the control. On the other hand, the tolerable rate of deviation is the maximum rate of deviation that the auditor is willing to accept without modifying their opinion on the fairness of the financial statements. Therefore, if the upper limit rate of deviation is greater than the tolerable rate of deviation, the audit team will choose to reduce their reliance on controls to ensure that they obtain sufficient and appropriate audit evidence to support their opinion on the financial statements.

The Audit Team Will Choose to Reduce the Reliance on Controls