If inherent risk increases and all other risks in the audit risk model stay constant (except the one referred to below),which of the following is correct?
A)Detection risk must increase.
B)Control risk will increase.
C)Audit risk will decrease.
D)Detection risk must decrease.

Question

Quizplus · Accepted Answer

When inherent risk increases and all other risks in the audit risk model stay constant, detection risk must decrease to maintain the same level of overall audit risk. This is because audit risk is a function of inherent risk, control risk, and detection risk. If inherent risk increases, either control risk must decrease (which is not an option here) or detection risk must decrease to compensate and keep the overall audit risk constant.

If Inherent Risk Increases and All Other Risks in the Audit