When using sampling in the study of internal control,the audit team audit team would compare a conservative estimate of the rate of deviation to the
A) Expected rate of deviation.
B) Sample rate of deviation.
C) Statistical rate of deviation.
D) Tolerable rate of deviation.

Question

Quizplus · Accepted Answer

The audit team would compare the conservative estimate of the rate of deviation to the tolerable rate of deviation. The tolerable rate of deviation is the maximum rate of deviation that the auditor is willing to accept without modifying the planned audit procedures. This comparison helps the auditor to determine whether the control system is effective or not. It helps in identifying the areas where the controls are weak, and further audit work is required. Therefore, option D is the best choice. Options A, B, and C are incorrect as they do not pertain to the concept of the tolerable rate of deviation.

When Using Sampling in the Study of Internal Control,the Audit