PA has set audit risk at 5% and determined that inherent risk and control risk is at 100%. What is the detection risk?
A) 5%
B) 50%
C) 95%
D) 20%

Question

Quizplus · Accepted Answer

Detection risk is calculated using the formula: Audit Risk = Inherent Risk x Control Risk x Detection Risk. Given that audit risk is 5% and both inherent and control risks are 100%, detection risk must be 5% to satisfy the equation.

PA Has Set Audit Risk at 5% and Determined That