Using the audit risk model, compute the detection risk for the following values of audit risk, inherent risk, and control risk. Then answer the questions below.

a. Which of the "points" yields the highest required detection risk? What does this imply for evidence gathering by the auditor?

b. Which of the "points" yields the lowest required detection risk? What does this imply for evidence gathering by the auditor?

c. Which point would require more audit effort (i.e., has the higher required detection risk)-Point B or Point C? Explain.

d. What factors affect the interpretation of these results?

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Point A Point B Point C Audit risk 10% 5% 1% Inherent risk 25% 40% 50% Control risk 50% 75% 5%