Detection risk can be broken down into tests of controls risk and analytical procedures risk.

Question

Quizplus · Accepted Answer

Detection risk primarily refers to the risk that an auditor fails to detect material misstatements in the financial statements. It is not specifically broken down into tests of controls risk and analytical procedures risk. Instead, it is affected by the effectiveness of an auditor's substantive procedures (which include tests of details and analytical procedures) and the auditor's assessment of inherent and control risks.

Detection Risk Can Be Broken Down into Tests of Controls