Week 3 - Detection Risk Flashcards
(5 cards)
1
Q
What is detection risk?
A
The risk that the auditor’s own procedures and review of the financial statements will not detect material errors or misstatements
2
Q
How is detection risk different from the other two risks?
A
Only risk which is controllable from auditor’s perspective
3
Q
How do we improve detection risk?
A
Increase sample size, test more, gather more evidence
4
Q
The level of detection risk adopted by the auditor will be adjusted to…
A
Reduce the overall audit risk to an acceptable level
5
Q
What does detection risk rely on?
A
The auditor having a full understanding of the client’s financial capabilities and business risks facing the company
