If audit risk is increased, what happens to detection risk?
A) It stays the same.
B) It increases.
C) It changes based upon the audit procedures conducted.
D) It decreases.

Question

Quizplus · Accepted Answer

When audit risk is increased, detection risk must be decreased in order to maintain an appropriate level of overall audit risk. This is because detection risk is the risk that the auditor will not detect material misstatements, and when the risk of material misstatements is higher (due to increased overall audit risk), the auditor must decrease detection risk to compensate.

If Audit Risk Is Increased, What Happens to Detection Risk