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Use the audit risk model to assess the audit risk of the administrative expense accounts. . The audit risk model: AR = IR x CR
Use the audit risk model to assess the audit risk of the administrative expense accounts. . The audit risk model: AR = IR x CR x DR where AR = audit risk; IR = inherent risk; CR = control risk; and DR = detection risk. Generally, where IR and CR have been assessed as high, auditor must reduce DR to a low level in order to reduce AR to a low level.
income statement is attached below and administrative expense can be found
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