Dear lecturer ,
I would like to ask you a question. Why is there an inverse relationship between detection risk and substantive procedures ?
When there is an increase in detection risk, we reduce the substantive procedure and vice versa. Could you please tell me the reasons ?
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Relationship between detection risk and substantive procedures
9y ago#1Detection risk is the risk that the auditor's procedures performed to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material.
So, detection risk is lowered by doing more substantive procedures.
Could you please explain me why doing more substantive procedures make detection risk be lowered ?
9y ago#3If you do more tests, eg inspect more invoices to ensure they are posted the right account, you have a greater chance of finding errors so the detection risk is less.
Ok ! Lecturer
Thank you very much !
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