When discussing planned detection risk (PDR)and the audit risk model, which of the following statements is NOT true?
A) PDR is a measure of the risk that the auditor will not detect a misstatement in an assertion that could be material.
B) When PDR is changed from low to medium, the required accumulation of evidence would be increased.
C) PDR determines the amount of evidence the auditor plans to accumulate, inversely with the size of planned detection risk.
D) PDR is dependent on the other three factors in the model; i.e., it will change only if another changes.

Question

Quizplus · Accepted Answer

Statement B is incorrect because when the Planned Detection Risk (PDR) is changed from low to medium, the required accumulation of evidence would actually be decreased, not increased. Lower PDR means a lower risk of not detecting a material misstatement is acceptable, thus requiring more evidence. Conversely, a higher PDR allows for a higher risk of not detecting a material misstatement, thus requiring less evidence.

When Discussing Planned Detection Risk (PDR)and the Audit Risk Model