Acceptable risk of assessing control risk too low (ARACR) and acceptable risk of incorrect acceptance (ARIA) are inversely related; that is, a decrease in ARACR is accompanied by an increase in ARIA.

Question

Quizplus · Accepted Answer

This statement is true as there is an inverse relationship between ARACR and ARIA. If the auditor assesses control risk too low, there is a higher risk of incorrect acceptance of the account balance or assertion, which increases ARIA. Conversely, if the auditor assesses control risk too high, there is a lower risk of incorrect acceptance, which decreases ARIA.

Acceptable Risk of Assessing Control Risk Too Low (ARACR) and Acceptable