[HCPA]

Hello Everyone,

Since I took the exam last quarter and was having trouble with Audit risk effect on my simulations. I had at least 2 questions that was asking about it so I just want to get this concept down for my next exam. So lets say ” If the company decided to venture into derivative /hedging to offset the price fluctuations in materials or investments (especially never having done it before) “.

They ask to to determine which risk will increase: CR,IH or DR? and what is the effect of the AR

So I think the IH will increase due to the auditors assessment. CR us unchanged . The acceptable level of DR is decrease (meaning performing more sub testing). And the effect of the AR is constant.

Am I correct? Do any of you guys know if where I can practice more this type of Sim questions. I sued Becker and Gleim for Sim but I did not see any questions like this much. Also, I need a list of IH and CR so I learn and be able to identify increases or decreases .

Thanks all for your help and I appreciate it