When inherent risk is assessed as higher (i.e.more material errors are likely to exist)and control risk is assessed the same from one year to the next,what is the likely effect on detection risk?
A)Detection risk will increase.
B)Detection risk will decrease.
C)Detection risk will stay the same.
D)Detection risk will need less documentation.

Question

Quizplus · Accepted Answer

When inherent risk is assessed as higher and control risk remains the same, auditors will typically reduce detection risk to achieve an acceptable level of overall audit risk. This means they will perform more or more effective audit procedures to catch material misstatements.

When Inherent Risk Is Assessed as Higher (I