A firm uses the audit risk model, AR=RMMXDR to plan audit programs, as described below. This often involves determining required DR after specifying M and AR, and then assessing the operating effectiveness of controls in terms of RMM, or DRERMM / AR THE FIRM'S POLICIES Audit Risk: The firm specifies AR for every application area and for any materiality amount, as: VERY LOW 1% to 50% is not permissible under the firm's guidelines. A. The auditor sets AR to VERY LOW, and RMM, the operating effectiveness, is found to be LOW. Calculate planned DR in accordance with the planning guideline. B. The auditor sets AR to LOW, and RMM, the operating effectiveness, is found to be HIGH. Calculate planned DR in accordance with the planning guideline C. The auditor sets AR to MODERATE, and RMM, the operating effectiveness, is found to be LOW. Calculate planned DR in accordance with the planning guideline