Question: Consider the equation below that represents the audit risk models for two different accounts in an audit. A: .05 = .9 x .8 x .0694

Consider the equation below that represents the audit risk models for two different accounts in an audit.

A: .05 = .9 x .8 x .0694

B: .05 = .9 x .3 x .1852

(1) Identify and define each term. Be complete and specific.

(2) For which account (A or B) will the audit team have to perform a higher level audit and why?

(3) What steps can an auditor take to perform a higher level audit?

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