audit risk= inherent risk + control risk + detection Risk
OR
audit risk= inherent risk * control risk * detection risk??
3 Replies
Yogesh Shah
(Managing Corporate Finance)
(1051 Points)
Replied 27 January 2012
Hi Mamta,
Audit Risk = Inherent Risk + Control Risk + Detection Risk
It is governed by SA 200 (new)
Inherent risk is susceptibility of financial statements to misstatement
Control risk is that these misstatements will not be detected by internal controls
Detection risk is that auditor may not detect these misstatements
All the above risks are different from each other and all of them CONSTITUTE audit risk.
S.Upadhyay
(Internal Audit)
(26 Points)
Replied 25 June 2012
Very nice and correct ans. given by mr.yogesh shah
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