You are in charge of planning the audit for Tackett Industries, Inc. You will use the audit risk

model for planning purposes. Audit Risk is set at $\mathrm{.}05($low$)$; AR $=.05$

IR and CR are assessed as follows:

$IR=\mathrm{.}50(moderate)$

$CR=\mathrm{.}30(low)$

Using this information, answer the following questions by responding in the text box below.

Label your responses, $1-5.$

Consider the inherent risk assessment. What evidence would you use to support the risk

assessment? $($hint; think about the video from last week and what the panelist mentioned in

"How Auditors Assess Risk".$)$

Consider the control risk assessment of $\mathrm{.}30($low$).$ What evidence would you gather to

support this assessment?

Given the assessments above, what is detection risk $($DR$)$ in quantitative terms? $($page $121$

in text has an example$).$

Now assume deviations were found when performing tests of controls. As a result, CR

was reassessed at $\mathrm{.}60($moderate$).$ Using the reassessed CR$,$ what is the new DR$?$

In this scenario, as CR increases $($from low to moderate$),$ what happens to DR and how

does this affect your substantive testing?