02-23-2005, 07:42 PM
Detection risk is the risk that auditor substantive procedure will not detect a misstatement that exists in the account balance or class of transaction that could be material, individually or when aggregated with misstatements in other balances or classes.
Level of detection risk relates the level of substantive procedures. The auditors control risk assessment, together with inherent risk assessment influences the nature timing and extent of substantive tests to be performed. To reduce detection risk and there fore audit risk.
There is an inverse relationship between detection risk and combined level of inherent and control risk. For example when inherent and control risk are high acceptable detection risk needs to be low to reduce audit risk to an acceptably low level.
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If I could... Then I would... Turn back time!!
Level of detection risk relates the level of substantive procedures. The auditors control risk assessment, together with inherent risk assessment influences the nature timing and extent of substantive tests to be performed. To reduce detection risk and there fore audit risk.
There is an inverse relationship between detection risk and combined level of inherent and control risk. For example when inherent and control risk are high acceptable detection risk needs to be low to reduce audit risk to an acceptably low level.
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If I could... Then I would... Turn back time!!
