A major limitation in the application of the audit risk model is the:
A) difficulty in understanding the effect on other factors in the model when one factor is changed.
B) difficulty in measuring the components of the model.
C) difficulty in defining the terms of the model.
D) failure of the Auditing and Assurance Standards Board to accept it and incorporate it into the standards.

Question

Quizplus · Accepted Answer

The audit risk model involves several components, such as inherent risk, control risk, and detection risk, and measuring each of these components can be challenging. Additionally, the accuracy of the model may be impacted by inaccurate or incomplete information. While there may be some difficulty in understanding the effect of one factor on the others, this is not necessarily a major limitation of the model. The terms of the model are generally well-defined, and the AASB has accepted and incorporated the model into auditing standards.

A Major Limitation in the Application of the Audit Risk