Question
1. One form of the risk model is AAR = IR x CR x PDR AAR = Acceptable Audit Risk CR = Control risk IR
1. One form of the risk model is AAR = IR x CR x PDR
AAR = Acceptable Audit Risk CR = Control risk
IR = Inherent Risk PDR = Planned Detection Risk
Indicate the effect of the following items on the components of the risk model (note you are asked to address planned evidence, not PDR).
Increase Decrease
No Effect Cannot determine
Management is planning to sell the business. The auditor decided to decrease reliance on controls compared with the preceding year.
Planned Evidence
Group of answer choices
Increase
Decrease
No Change
Cannot Determine
2.
One form of the risk model is AAR = IR x CR x PDR
AAR = Acceptable Audit Risk CR = Control risk
IR = Inherent Risk PDR = Planned Detection Risk
Indicate the effect of the following items on the components of the risk model (note you are asked to address planned evidence, not PDR).
Increase Decrease
No Effect Cannot determine
Management is planning to sell the business. The auditor decided to decrease reliance on controls compared with the preceding year.
Control Risk
Group of answer choices
No change
Decrease
Increase
Cannot Determine
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Cost management a strategic approach
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
5th edition
73526940, 978-0073526942
