Audit Chapter 4
|Detection risk||The level of risk the auditor is willing to take that the audit procedures will fail to find material errors that were not detected and/or corrected by a system of internal control. DR determines the evidence accumulation. |
If DR is low,then audit evidence required is considerable.If DR is high,then less evidence is needed.
Statistical Sampling is used to determine the amount of audit evidence given a value of detection risk.
|If risk of material misstatement is higher than originally anticipated, the auditor may respond by||Increasing supervision.|
|A known misstatement||Example: A misstatement found by the auditor that is due to incorrect pricing on a sales invoice.|
|If acceptable audit risk is set at low and the assessed risk of material misstatement is high, then detection risk must be||low|