When testing controls, the tolerable error is
A) the tolerable rate of deviation that an auditor will accept before concluding that a control is effective.
B) the minimum rate of deviation that an auditor will accept.
C) the tolerable rate of deviation that an auditor will accept before concluding that a control is ineffective.
D) the maximum amount of error in an account balance that an auditor will accept before concluding that an account is materially misstated.

Question

Quizplus · Accepted Answer

The tolerable error, in the context of testing controls, is the rate of deviation from prescribed control procedures that an auditor can accept before concluding that the control is not effective. It is a threshold used to determine the effectiveness of the control being tested. If the observed deviation rate exceeds this threshold, the auditor may conclude that the control is not operating effectively.

When Testing Controls, the Tolerable Error Is