Using the audit risk model: If audit risk is 0.05,inherent risk is 1.0,control risk is 0.20,and analytical procedures risk is 1.0,the risk of incorrect acceptance is 0.25.

Question

Quizplus · Accepted Answer

The risk of incorrect acceptance is calculated as inherent risk x control risk x analytical procedures risk x detection risk. In this case, the risk of incorrect acceptance is 1.0 x 0.20 x 1.0 x 0.25 = 0.05, which is equal to the audit risk.

Using the Audit Risk Model: If Audit Risk Is 0