A detection risk of 1.5 or 150% means _______.
A)there would be a 150% risk that the auditors' procedures will not be effective in detecting a material misstatement
B)auditors will need to undertake 1.5 times the audit procedures planned in the initial stages of the audit
C)there would be a 150% risk that the auditors' procedures will be effective in detecting a material misstatement
D)auditors will perform extensive detailed testing of related account balances and use larger sample sizes because a 1.5 detection risk is a low detection risk

Question

Quizplus · Accepted Answer

A detection risk of 1.5 or 150% means that there is a 150% risk that the auditors' procedures will not be effective in detecting a material misstatement. This means that there is lower assurance that the financial statements are free from material misstatements. In such a situation, auditors may increase their audit procedures, such as performing more extensive testing or using larger sample sizes, to reduce the risk of not detecting material misstatements.

A Detection Risk of 1