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One form of the risk model is AAR = IR x CR x PDR AAR = Acceptable Audit Risk CR = Control risk IR =

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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 (note you are asked to evaluate planned evidence) | = Increase D = Decrease N = No Effect 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 acceptable audit risk: O Increase Decrease O No change O Cannot determine

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