There is an inverse relationship between control risk and detection risk.

Question

Quizplus · Accepted Answer

Control risk refers to the risk that a material misstatement may occur and not be prevented or detected in a timely manner by the entity's internal control. Detection risk, on the other hand, is the risk that a material misstatement may occur and not be detected by the auditor's procedures. The higher the level of internal control, the lower the control risk, which means the auditor can afford to perform lower levels of substantive procedures and have lower detection risk. Likewise, if the auditor chooses to reduce detection risk, they would need to perform more substantive procedures, which reduces control risk. Therefore, there is an inverse relationship between control risk and detection risk.

There Is an Inverse Relationship Between Control Risk and Detection