The Audit Risk Model Is a Theoretical Model Designed to Guide

question 13

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 lower control risk will mean that more internal control testing is done.If more internal control testing is done the auditor will gather less substantive evidence.
• B)A higher control risk will mean that more internal control testing is done.If more internal control testing is done the auditor will gather more substantive evidence.
• C)Substantive testing is usually done regardless of the level of control risk because the risk of material misstatement will usually be zero.
• D)A higher detection risk means more substantive testing is done.
• E)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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