Question: Refer to Exhibit 7 3 and consider the audit risk model
Refer to Exhibit 7.3 and consider the audit risk model, whereby Audit Risk = Inherent Risk × Control Risk × Detection Risk. Complete the boxes in the table below. Describe generalizations about the relationships among the four components of the audit risk model that you gain from the completed table. In which case will the auditor conduct the greatest amount of auditwork?
Answer to relevant QuestionsWhat are examples of how an auditor might change (a) The nature of risk response, (b) The timing of risk response, (c) The extent of risk response?The Auditing in Practice feature, "Application of Accounting Principles and Related Disclosures," discusses guidance from AS 12 regarding the auditor's responsibilities to understand management's application of accounting ...Distinguish between a controls reliance audit and a substantive audit. Which approach should an auditor consider to be most effective?Refer to Exhibits.a. Define the following risks:● Risk of incorrect acceptance of internal control reliability● Risk of incorrect rejection of internal control reliability● Risk of incorrect acceptance of book value● ...Assume that you are using attribute sampling to test the controls over revenue recognition of the Packet Corporation, a public company, and will use the results as part of the evidence on which to base your opinion on its ...
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