Audit risks for particular accounts and disclosures can be conceptualised in a model such that Audit risk (AR) = Inherent risk (IR) x Internal control risk (CR) x Detection risk (DR). Using this audit risk model as a framework and decide whether the auditors conclusion in each of the independent situations below is appropriate.

a. Tom, a CPA, has participated in the audit of a listed company, Jingle Ltd. for the past five years. At the start, he worked as an audit trainee for the job; for the past two years, he was the supervisor in charge. In his experience, he has never seen an audit adjustment to be put through to the financial statements prepared by the client. Tom was the manager in charge of this job for the current year and he believed that the inherent risk must be zero.