The Tolerable Failure Rate Is the Minimum Rate of Control

question 108

True/False

The tolerable failure rate is the minimum rate of control procedure failure that can occur sufficient to cause the auditor to re-assess the preliminary assessment of control risk to a higher level.

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Definitions:

Defective

Pertaining to a lack of perfection, flaws, or deficiencies in a product, service, or legal document that impair its quality, functionality, or legality.

Security Interest

Any interest “in personal property or fixtures which secures payment or performance of an obligation” [UCC 1–201(37)].

Repossesses

The act of taking back an item, typically a vehicle or property, when the buyer fails to make the required payments.

Breach of Warranty

The failure to fulfill the terms of a promise or assurance, typically regarding the quality, condition, or performance of a product or service.