The acceptable level of detection risk is inversely related to the:
A)assurance provided by substantive tests.
B)risk of misapplying audit procedures.
C)preliminary judgment about materiality levels.
D)risk of failing to discover material misstatements.

Question

Quizplus · Accepted Answer

The acceptable level of detection risk decreases as the assurance provided by substantive tests increases, meaning they are inversely related. Detection risk is the risk that the auditor fails to detect a material misstatement in the financial statements. When substantive tests (tests of transactions and account balances) provide high assurance that the financial statements are free from material misstatement, the auditor can accept a lower detection risk.

The Acceptable Level of Detection Risk Is Inversely Related to The