The Audit Risk Model Is a Theoretical Model Designed to Guide

question 51

Multiple Choice

The audit risk model is a theoretical model designed to guide the decision process of the auditor.The model could be used as an equation to calculate detection risk,but it is probably more useful to think of the model as expressing relationships among the risks included in the model.Some of these relationships include

• A)A higher risk of material misstatement will result in a lower detection risk.A lower detection risk means that the auditor will gather less substantive evidence.
• B)Substantive testing is always done because the risk of material misstatement will never be zero.Detection risk determines how much substantive testing will be done.
• C)A higher detection risk means more substantive testing is done.
• D)In the model,audit risk is a varying number.It is the level of audit risk that should remain at the end of the audit.

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Definitions:

Volcanic Eruptions

The process by which magma, gases, and ash escape from a volcano to the surface.

Secondary Xylem

The part of a plant’s vascular system that is produced after the first year of growth, providing support and conducting water and nutrients; it's often referred to as wood in trees.

Cambium

See Lateral Meristems.

Ground Tissue

Ground tissue comprises most of a plant's vegetative organs, such as leaves and stems, providing support, storage, and photosynthesis functions.