The auditor should consider audit risk when planning and performing an audit of

financial statements. Audit risk should also be considered together in determining

the nature, timing, and extent of auditing procedures and in evaluating the results of

those procedures.

Required:

a$.$ Define audit risk.

b$.$ Describe the components of audit risk $($e$.$g$.,$ inherent risk, control risk, and detec$-$

tion risk$).$

c$.$ Explain how these components are interrelated.