Chapter 15 Audit Terms

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10 Terms

1
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tolerable exception risk (TER)

how often can a control fail and still and we still conclude it operates effectively

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acceptable risk of over-reliance (ARO)

rest that we’re willing to rely on control when it doesn’t work

3
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estimated population exception rate (EPER)

estimation of control’s failure rate before we begin sampling

4
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sample exception rate (SER)

number of exceptions/sample size

5
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Allowance for Sampling Risk

method of evaluating sampling risk for nonstatistical samples, (TER-SER)

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SER > TER

bad, control not operating effectively

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SER < TER

good, controls operating effectively

8
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computed upper exception rate (CUER)

max error rate in population within particular interval (CUER = SER + allowance for sampling risk)

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CUER > TER

Bad, The risk is higher than ARO (%) that the control fails more than is tolerable

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CUER <(or equal to) TER

Good, The risk is less than ARO (%) that the control fails more than is tolerable