When Determining Tolerable Exception Rate (TER)

question 103

Multiple Choice

When determining tolerable exception rate (TER) ,

• A) the auditor considers the degree of reliance to be placed on the control and the significance of the control to the audit.
• B) 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.
• C) control deviations increase both the risk of material misstatements in the accounting record, and will always result in misstatements.
• D) a smaller sample size is needed for a low TER than for a high TER.