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Dear Sir ,
If , I am right . Detection risk is the risk that misstatements not detect by audit procedures and If there is strong internal control system then detection risk increased or decreased ?
Short answer is “DR must be reduced”. See in conjunction with the audit risk model in Chapter 11 my illustration in this post https://opentuition.com/topic/audit-risk-36/
Sir basically I am read the OT notes chapter number 8 fraud and error . when I read fraud head there is written ( effective system of internal control as this will greatly decrease the risk of fraud and increase the risk of detection )
Plz explain it how effective system of internal control increase the risk of detection ?
Ah – I see now how that could cause confusion. This is not referring to detection risk (the component of audit risk that is managed by the auditor) – it is referring to the risk of detection of fraud (faced by the perpetrator).
Thank you for pointing this out – I propose to change “risk of detection” to “likelihood of detecting fraud”. Is that clearer?
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