CAF-8 · Chapter 3 · Question 5 of 10
If an auditor assesses the risk of material misstatement (Inherent Risk x Control Risk) as high, how must they adjust Detection Risk to keep overall Audit Risk acceptably low?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Decrease Detection Risk by performing more robust and extensive substantive procedures.
Explanation
Audit Risk = IR x CR x DR. If IR and CR are high, the auditor must lower DR by doing more testing (larger samples, better evidence) to keep overall AR low.
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