05-03-2004, 07:51 PM
Respected Auditors and Accountants
Assalam a Alaikum
the audit risk model is normally given as
AR = IR x CR x DR
where AR is total audit risk
CR is control risk
IR is Inherent risk
DR is detection risk
I just wanted to ask if it has any limitations regarding its operation where it allows the auditor to set quantitative values on Inherent Risk and Control Risk so as to allow for an increased amount of Detection Risk and hence a lower level of substantive testing and vice versa.
(I'd later explain it numerically if necessary.But first please confirm about its limitations if any?)
thanking you
Ashfaque Shiskin Hunzawi.
Assalam a Alaikum
the audit risk model is normally given as
AR = IR x CR x DR
where AR is total audit risk
CR is control risk
IR is Inherent risk
DR is detection risk
I just wanted to ask if it has any limitations regarding its operation where it allows the auditor to set quantitative values on Inherent Risk and Control Risk so as to allow for an increased amount of Detection Risk and hence a lower level of substantive testing and vice versa.
(I'd later explain it numerically if necessary.But first please confirm about its limitations if any?)
thanking you
Ashfaque Shiskin Hunzawi.
