Tolerable Deviation vs Expected Deviation: What Happens to Sample Size?
The less deviation the auditor can tolerate and the more deviation the auditor expects, the more evidence the sample generally needs to provide.
Tolerable deviation rate
This is the maximum control-deviation rate the auditor is willing to accept while still relying on the control at the planned level.
Expected deviation rate
This is the deviation rate the auditor expects based on prior experience, walkthroughs, or other information.
Sample-size relationship
Lower tolerable deviation generally increases sample size, while higher expected deviation also generally increases sample size.
Exam strategy
Think tighter tolerance equals more testing; more expected exceptions also equals more testing.
The takeaway
Lower tolerable deviation and higher expected deviation both generally push control-testing sample size upward.
Related Summit resources
FAQ
What is the key distinction?
Lower tolerable deviation and higher expected deviation both generally push control-testing sample size upward.
What should I identify first?
The less deviation the auditor can tolerate and the more deviation the auditor expects, the more evidence the sample generally needs to provide.
Why is this tested?
Understand how tolerable deviation rate and expected deviation rate affect control-testing sample size.