Inherent risk is ________ related to planned detection risk and ________ related to the amount of audit evidence.
A) directly; inversely
B) directly; directly
C) inversely; inversely
D) inversely; directly

Question

Quizplus · Accepted Answer

Inherent risk is inversely related to planned detection risk, meaning that a higher inherent risk will require a lower planned detection risk to achieve an overall acceptable level of audit risk. Inherent risk is directly related to the amount of audit evidence required, as a higher inherent risk will require more audit evidence to gain assurance that the financial statements are not materially misstated.

Inherent Risk Is ________ Related to Planned Detection Risk and ________

Inherent Risk Is Related to Planned Detection Risk and