Audit risk Essay
Certain accounts like Cash, Lines of Credit, and Intangibles have to be audited 100 percent because these generally involve perceptible and provable transactions which do not normally expend time in the entire audit process. These are also significant figures to a confectionary industry like Sweet Truths.
The accounts that are audited 100 percent needs to have materiality apportioned to such accounts; this is the reason why materiality is distributed only to those accounts that are sampled. In accounts like inventory, property, plant and equipment, and accounts payable, a number of transactions and verification have to be undergone and auditing them meticulously would take so much time.
Detection risk is the only component of audit risk that is within the control of the auditor. This risk may fall under the control of an auditor by means of knowing the range of the audit procedures performed by him or her as an auditor. From the balance sheet accounts in the simulation provided, I presumed the audit risk is at high while having inherent risk and control risk at low for a certain detection risk at high.
The reason the three risks that compose audit risk are inter-related is that they support the assessor like
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