What is the meaning of Tolerable misstatement and tolerable rate of deviation?

2 answers

Audit Staff October 5, 2017

Tolerable misstatements means that misstatements in fst which is below the tolerable limit and deviations are overriding of internal control system subject to maximum tolerable limit of deviations planned.

#1
Ravi Staff October 6, 2017

Deviation is word used when auditor observes internal control system is not being followed
Misstatement is word used when auditor observes data in financial statement is incorrect
After sampling auditor determines deviations and misstatements observed, then on this basis he projects what could be total deviations and misstatements in poloulation
then he compares projected figures with tolerable limits, if they are within limits, he concludes deviations and misstatements are within acceptable limits and he can rely on controls or financial data as appropriate, no need to check further and vice versa
so these are acceptable limits for deviations and misstatement

#2

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