What is the expected deviation rate?

Question

Quizplus · Accepted Answer

The Answer is The auditor generates a tentative estimate of the expected deviation rate (EDR) for the population being tested in order to calculate the desirable sample size. One possible source of the estimate is the results from a prior audit. If similar tests were performed in the past, the actual deviation rate from those tests could be used as the estimate of the deviation rate for the current year after adjusting for any process changes (improvements) that may have been made. Another approach that may be used is to audit a small preliminary sample of transactions and use those results to estimate the EDR for the main sample to be taken later. In some cases, the auditor may simply specify the expected deviation rate as zero.

What Is the Expected Deviation Rate