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6 Cards in this Set
- Front
- Back
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What statement acknowledges audit risk in an auditor's standard report?
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that the auditor obtained "reasonable assurance" that the FS are free of material misstatement
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What are the 3 types of misstatement?
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1. Misapplies GAAP
2. Omits necessary information 3. Departs from fact |
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What is the audit risk formula?
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AR = IR x CR x DR
Audit Risk = Inherent Risk x Control Risk x Detection Risk |
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What is inherent risk?
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The susceptibility of an assertion to a material misstatement, assuming that there are no related internal control policies or procedures. The risk that misstatement is greater for some assertions than for others.
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What is control risk?
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The risk that a material misstatement that could occur in an assertion will not be prevented or detected on a timely basis by the entitys internal control policies or procedures.
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What is detection risk?
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The risk that the auditor will not detect a material misstatement that exists in an assertion. Detection risk is a function of the effectiveness of an auditing procedure and of its application by the auditor.
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