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One form of the risk model is AAR = IR X CRX PDR AAR = Acceptable Audit Risk CR = Control risk IR = Inherent
One form of the risk model is AAR = IR X CRX PDR AAR = Acceptable Audit Risk CR = Control risk IR = Inherent Risk PDR Planned Detection Risk (note you are asked to evaluate planned evidence) I = Increase N = No Effect D = Decrease C = Cannot determine In auditing inventory, you decide to decrease reliance on controls. You also note significant additional borrowings with inventory as collateral. Indicate the effect on inherent risk: Increase O Decrease O No change O Cannot determine
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