Tolerable misstatement
Tolerable misstatement is an amount set by the auditor for a sampling procedure to obtain an appropriate level of assurance that actual misstatement in a population does not exceed that amount. It is applied in evaluating sample results.
Worked example
The auditor sets a tolerable misstatement for a receivables sample below the relevant performance materiality.
Common mistake
Tolerable misstatement is not permission for management to leave an error uncorrected.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Supporting | September 2026–June 2027 |