Detection risk
Detection risk is the risk that audit procedures performed to reduce audit risk to an acceptably low level fail to detect an existing material misstatement. It reflects the effectiveness of procedures and their application. The auditor responds to greater assessed risk with procedures intended to reduce detection risk.
Worked example
The auditor increases confirmation and subsequent-receipt testing where receivable existence is assessed as high risk.
Common mistake
Testing can reduce detection risk but cannot eliminate it because auditing has inherent limitations.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Direct | September 2026–June 2027 |