The maximum rate of deviation that may exist in the operation of a control policy or procedure before the auditors would reduce reliance on internal control is referred to as:
A)Acceptable rate of deviation.
B)Control risk.
C)Tolerable rate of deviation.
D)Upper limit rate of deviation.

Question

Quizplus · Accepted Answer

The maximum rate of deviation that may exist in the operation of a control policy or procedure before the auditors would reduce reliance on internal control is referred to as the "tolerable rate of deviation." This is the level beyond which auditors would consider the internal control system as inadequate and unreliable, and control risk would increase. Acceptable rate of deviation and upper limit rate of deviation are not commonly used terms in auditing. Control risk refers to the risk that a material misstatement will not be prevented, or detected and corrected by the entity's internal control.

The Maximum Rate of Deviation That May Exist in the Operation