The audit risk model is a theoretical model designed to guide the decision process of the auditor.The model could be used as an equation to calculate detection risk,but it is probably more useful to think of the model as expressing relationships among the risks included in the model.Some of these relationships include
A)A higher risk of material misstatement will result in a lower detection risk.A lower detection risk means that the auditor will gather less substantive evidence.
B)Substantive testing is usually done because the risk of material misstatement will usually be zero.Detection risk determines how much substantive testing will be done.
C)A lower detection risk means that more control testing has been done.
D)A lower detection risk will result in that more substantive testing is done.

Question

Quizplus · Accepted Answer

The statement "A lower detection risk will result in that more substantive testing is done" is correct. This is because when detection risk is lower, the auditor is more confident that their substantive testing will detect any material misstatements. Thus, they will perform more substantive testing to ensure that no material misstatements are missed. Choices A, B, and C are incorrect as they are either inaccurate or do not express a relationship in the audit risk model.

The Audit Risk Model Is a Theoretical Model Designed to Guide