Question
Using the audit risk model, identify the relationship between the following elements. For each of the items below, highlight whether the two elements have an
Using the audit risk model, identify the relationship between the following elements. For each of the items below, highlight whether the two elements have an inverse relationship, a direct relationship, or no relationship. When considering each item, assume that the other components of the risk model remain constant. Inherent risk and risk of material misstatement : _____ Inherent risk and control risk: _____ Inherent risk and detection risk: _____ Inherent risk and substantive: _______ control risk and detection risk: ______ risk of material misstatement and detection risk _______ Note: Audit Risk Model: Audit Risk = Risk of material misstatement x detection risk; (AR = RMM x DR) Inherent risk x Control risk = Risk of material misstatement; (RMM = IR x CR)
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