Using Your Knowledge of the Relationships Among Acceptable Audit Risk

question 54

Essay

Using your knowledge of the relationships among acceptable audit risk, inherent risk, control risk, planned detection risk, tolerable error and planned evidence, state the effect on planned evidence (increase or decrease) of changing each of the following factors, while the other factors remain unchanged.
1. An increase in acceptable audit risk. __________
2. An increase in inherent risk. __________
3. A decrease in control risk. __________
4. An increased in planned detection risk. __________
5. An increase in tolerable misstatement. __________

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Definitions:

Declining Birthrates

A situation where the number of births per year decreases over a period of time, affecting population growth.

Population Growth

The increase in the number of individuals in a population, often measured by a percentage over time.

Electricity Generating Plants

Electricity generating plants are facilities equipped to produce electricity through various means, including fossil fuels, nuclear power, or renewable sources.

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, and insurance premiums.