Hi,
when we answer audit risk or risk of material misstatement in question 1 part (a), do we have to mention whether it's a inherent risk, control risk or detection risk after we have described the impact of the risk on financial statement ? or is it just simply good to have it on the answer.
One thing i'm worried is that, i might say the wrong risk and lose the mark.
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audit risk
7y ago#1I think it can be useful to mention which it is, particularly as it might influence other parts of your answer. For example, if a control risk had been identified at the interim audit stage and corrected, extra detection work has to be done only on transactions before the correction. Detection risk is usually a matter for the auditor and controllable by the auditor. However, it is imposed on the auditor if the client is new, so more care is needed.
However, if you are pressed for time it is much better to concentrate on describing the risks rather than allocating them to inherent, control or detection.
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