The auditor set audit risk at 5%, inherent risk at 100%, and control risk at 50%, and determined a detection risk of 10%. If control risk had been 80%, detection risk would be about
A) 16%.
B) 10%.
C) 6%.
D) 5%.

Question

Quizplus · Accepted Answer

Detection risk is calculated as Audit Risk / (Inherent Risk * Control Risk). With control risk at 80%, detection risk would be 5% / (100% * 80%) = 6.25%, which is approximately 6%.

The Auditor Set Audit Risk at 5%, Inherent Risk at 100