Ask Joey ™ a Question


You might also be interested in...

  • What is audit risk?

    Audit risk is the risk that the auditor will fail to modify an opinion on the financial statements when they are in fact materially misstated. This will typically arise because an auditor will never be able to obtain absolute assurance by conducting audit procedures. Audit risk will only be able to be reduced to an […]

  • If risk of material misstatement is set at high, what should detection risk be set to?

    Detection risk has an inverse relationship with the assessed risk of material misstatements (Inherent risk X control risk). Therefore, if risk of material misstatement is high, then detection risk would be set to low. Since detection risk is to low, that means that the acceptable level of risk is low, and the audit team should […]

  • If risk of material misstatement is set at low, what should detection risk be set to?

    Detection risk has an inverse relationship with the assessed risk of material misstatements (Inherent risk X control risk). Therefore, if risk of material misstatement is high, then detection risk would be set to high. This means that the audit team can rely on controls and can decrease the amount of substantive testing that needs to […]