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In Practice, Auditors Rarely Assign Numerical Probabilities to Inherent Risk

Question 26

Essay

In practice, auditors rarely assign numerical probabilities to inherent risk, control risk, or audit risk. It is more common to assess these risks as high, medium, or low. For each of the four situations below, fill in the blanks for detection risk and the amount of evidence you would plan to gather ("planned evidence") using the terms high, medium, or low.
SITUATION
1234 Audit risk  Low  Low  High  High  Inherent risk  High  Low  Low  Low  Control risk  High  Low  Medium  Low  Detection risk  Planned  evidence \begin{array} { | l | l | l | l | l | } \hline & 1 & 2 & 3 & 4 \\\hline \text { Audit risk } & \text { Low } & \text { Low } & \text { High } & \text { High } \\\hline \text { Inherent risk } & \text { High } & \text { Low } & \text { Low } & \text { Low } \\\hline \text { Control risk } & \text { High } & \text { Low } & \text { Medium } & \text { Low } \\\hline \text { Detection risk } & & & & \\\hline \begin{array} { l } \text { Planned } \\\text { evidence }\end{array} & & & & \\\hline\end{array}

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1.low, high
2.medium...

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