The tolerable rate of exceptions for tests of controls is generally:
A) lower than the expected rate of errors in the related accounting records.
B) higher than the expected rate of errors in the related accounting records.
C) identical to the expected rate of errors in the related accounting records.
D) unrelated to the expected rate of errors in the related accounting records.

Question

Quizplus · Accepted Answer

The tolerable rate of exceptions for tests of controls is typically set at a level higher than the expected rate of errors in the related accounting records. This is because auditors want to be reasonably sure that any exceptions they find are not simply the result of chance or random error, but are actually indicative of a significant problem with the controls being tested. By setting the tolerable rate higher than the expected rate, auditors can be more confident in their conclusions about the effectiveness of the controls being tested.

The Tolerable Rate of Exceptions for Tests of Controls Is