When Discussing Planned Detection Risk (PDR)and the Audit Risk Model

question 70

Multiple Choice

When discussing planned detection risk (PDR) and the audit risk model, which of the following statements is NOT true?

• A) PDR is a measure of the risk that the auditor will not detect a misstatement in an assertion that could be material.
• B) When PDR is changed from low to medium, the required accumulation of evidence would be increased.
• C) PDR determines the amount of evidence the auditor plans to accumulate, inversely with the size of planned detection risk.
• D) PDR is dependent on the other three factors in the model; i.e., it will change only if another changes.

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Definitions:

Accumulated Depreciation

A cumulative total of all depreciation expenses charged on an asset over its life up to a specific date.

Accumulated Depreciation

The cumulative amount of depreciation for an asset up to a single point in its life.

Double-declining-balance

An accelerated depreciation method that doubles the rate at which an asset's book value decreases, reflecting its quicker loss of value.

Second Year

Refers to the second year in a multi-year analysis, project, or financial statement reporting period.