Lucy Pelletier was training a team of new auditors and delivered some interesting rules of thumb about control risk and detection risk:
"The required level of confidence is a function of control risk when testing controls and detection risk when conducting substantive tests."
"When detection risk is determined to be low, an auditor will require a low level of confidence that the transactions and accounts are not materially misstated.
Which of the above two statements are true?
A) (i) only
B) (ii) only
C) both (i) and (ii)
D) neither (i) or (ii)

Question

Quizplus · Accepted Answer

The first statement is true because the required level of confidence in testing controls is indeed a function of control risk. The second statement is false because when detection risk is low, an auditor requires a high level of confidence that the transactions and accounts are not materially misstated.

Lucy Pelletier Was Training a Team of New Auditors and Delivered