Acct 480
Chapter 7: Planning and RMMs	Required: Complete Problem 1 (first tab) and Problem 2 (second tab) before submitting this assignment.
	AUDIT RISK MODEL
Instructions: The following are assessments have been made by the auditors on 8 different audit engagements; using the Audit Risk Model formula, calculate the planned detection risk and then determine the audit approach and the level of evidence (work to be performed) that would be appropriate for the derived detection risk:
									Audit Risk Model Components:	Audit 1	Audit 2	Audit 3	Audit 4	Audit 5	Audit 6	Audit 7	Audit 8
Inherent Risk	30.0%	40.0%	50.0%	50.0%	70.0%	80.0%	90.0%	100.0%
Control Risk	50.0%	100.0%	60.0%	100.0%	70.0%	70.0%	80.0%	100.0%
Audit Risk	5.0%	5.0%	5.0%	5.0%	1.0%	1.0%	1.0%	1.0%
Detection Risk	33.3%	12.5%	16.7%	10.0%	2.0%	1.8%	1.4%	1.0%
Audit Approach: Based on the Detection Risk you derived, enter "CR" for Controls Reliance approach OR enter "SO" for a Substantive Only approach --->
Level of evidence (Quantity and/or Quality): Enter Low, Moderate, or High --->

Please fill in the answers for the bottom 2 rows and provide explanations for your answers. Thanks!