Tolerable Deviation Rate
Definition
The maximum error rate the auditor is willing to accept in the population without modifying the audit conclusion. If the projected error rate from the sample exceeds this threshold, the control cannot be assessed as effective.
- Defines
- Maximum acceptable control error rate in the population
- Set by
- The auditor, before sampling
- Compared against
- Projected error rate from the sample
- Consequence if exceeded
- Control cannot be assessed as effective
Common questions
Who decides the tolerable deviation rate and when?+
The auditor sets it during audit planning, before testing the sample, based on how much reliance the audit plan places on the control. Setting it after seeing results would undermine the objectivity of the test.
What happens if the sample's projected error rate is close to but under the tolerable rate?+
The auditor typically applies professional judgment and may extend testing or adjust the assessed level of control reliance, because a result close to the threshold carries more sampling risk than one comfortably below it.
Is a lower tolerable deviation rate always more conservative and safer?+
A lower rate does demand more assurance from the control, but it also requires a larger sample size to test reliably, so auditors balance the tolerable rate against the practical cost of gathering enough evidence.
Related terms
- Attribute Sampling
- A statistical sampling method that tests whether each selected item either has or lacks a specified attribute, for example whether a change...
- Confidence Level
- An explicit label attached to an attribution assessment indicating how strongly the available evidence supports the conclusion. Standard tiers are low, medium,...
- Judgement Sampling
- Selection of audit items based on the auditor's professional assessment of where errors or weaknesses are most likely to exist. Results cannot...
- Upper Error Limit (UEL)
- The maximum error rate that could exist in the population at the chosen confidence level, given the number of exceptions found in...
- Working Paper
- The documented record of an audit procedure: what was tested, how items were selected, the evidence obtained, any exceptions found, and the...