When determining tolerable exception rate (TER),

[sh03641]

Question 1

When choosing the appropriate acceptable risk of overreliance, the auditor needs to
◦ rely on his/her professional judgment.
◦ err on the side of conservatism.
◦ consult the professional standards.
◦ follow SEC guidelines.

Question 2

When determining tolerable exception rate (TER),
◦ the auditor considers the degree of reliance to be placed on the control and the significance of the control to the audit.
◦ if only one internal control is used to support a low control risk assessment for an objective, TER will be higher for the attribute than if multiple controls are used to support a low control risk assessment for the same objective.
◦ control deviations increase both the risk of material misstatements in the accounting record, and will always result in misstatements.
◦ a smaller sample size is needed for a low TER than for a high TER.

[nikspatel037]

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[sh03641]

Gracias!

[Sarahjh]

Thanks for the timely response, appreciate it