Planned detection risk I. determines the amount of substantive evidence the auditor plans to accumulate.
II) is dependent on inherent risk and business risk.
A)I only
B)II only
C)I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

Planned detection risk refers to the risk that the auditor fails to detect a material misstatement in the financial statements despite having completed an audit that complies with auditing standards. It is one of the components that make up audit risk, which is the risk that the auditor provides an inappropriate opinion on the financial statements. The auditor sets planned detection risk based on their understanding of inherent risk and control risk. It determines the amount of substantive evidence the auditor plans to accumulate, and therefore, only statement I is correct. Statement II is incorrect because planned detection risk is not dependent on business risk; it is dependent on inherent risk and control risk.

Planned Detection Risk I