Detection risk vs "Allowable" detection risk

  • Creator
    Topic
  • #187155
    Anonymous
    Inactive

    So When you see the term detection risk should it be read as “allowable” detection risk?

    for example if a question says you increase Detection risk:

    is it saying you are increasing the “allowable” risk that misstatements will go undetected? (leading to less substantive testing)

    or

    that you are increasing the risk that misstatements will go undetected (leading to increased substantive testing)

Viewing 3 replies - 1 through 3 (of 3 total)
  • Author
    Replies
  • #582214
    Gusher_hi
    Member

    Detection risk means the level of risk that an auditor must accept or allow given the assessment of inherent and control risk.

    E.g. if a question says you can increase detection risk, that means you can accept more risk that material misstatements will go undetected.

    #582215

    I believe “Detection Risk” and “Allowable Detection Risk” are exactly the same thing

    It's just a way that the CPA Exam likes to word things in a confusing way to blatantly trick you

    AUD - 08/04/14 - 83
    FAR - 11/29/14 - 80
    REG - 02/26/15 - 89
    BEC - 05/30/15 - 86

    DONE!

    #582216
    Anonymous
    Inactive

    I concur; detection risk = allowable detection risk

    Therefore, when detection risk increases, substantive tests decrease

    I had the same problem/revelation when I was studying audit

Viewing 3 replies - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.