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I understand that Detection Risk is the risk the auditor WILL NOT detect a misstatement, and that DR is under the external auditor’s control. My hang up is its inverse relationship with RMM and substantive tests.
If Detection risk is high, meaning the risk is high you don’t find material misstatements, then the amount of substantive testing is lower. But that seems completely opposite of what it should be. If I’m not going to detect misstatements, I should have to INCREASE my substantive tests…
What’s even more frustrating is the fact I understand it’s an inverse relationship so I can usually get the questions correct in MCQ, but I’m getting them right based on a formula and not my actual knowledge of it.
Can someone help clarify! Thanks.
REG - 68 | 71 | 88 | 86
FAR - 72 | 74 | 79
AUD - 66 | 70 | 77
BEC - 62 | 74 | 80Guess that means I'm a soon-to-be CPA!
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