Answered: clarify the relationship between audit…

clarify the relationship between audit risk and materiality determining the right degree of audit risk necessitates an auditor making a determination on materiality

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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clarify the relationship between audit risk and materiality determining the right degree of audit risk necessitates an auditor making a determination on materiality.

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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 detection risk). c. Explain how these components are interrelated. (AICPA, adapted)
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