AUDTT RISK MODEL PROBLEM

ABC&Co. is an audit and assurance firm which has recently accepted the audit of Banco de oro (BDO) . During the planning of the audit, engagement manager has noted the following information regarding BDO for consideration in the risk assessment of the assignment:

• BDO is a listed company operating in the financial services sector
• BDO has a large network of subsidiaries, associates and foreign branches
• The company does not have an internal audit department and its audit committee does not include any members with a background in finance as suggested in the corporate governance guidelines
• It is the firm's policy to keep the overall audit risk below 10%
• Assumed control risk is 50% and inherent is 60%

Required:

Compute for the planned detection risk?