Relationship of Audit risk and Detection risk? Direct relationship?

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    Topic
  • February 3, 2016 at 4:05 am #199835
    Anonymous
    Inactive

    Hello Everyone,

    Is there a direct relationship between Audit Risk (AR) and detection risk (DR)?

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  • February 3, 2016 at 5:20 am #756687
    Biff-1955-Tannen
    Participant

    They will change in the same direction, but it is not a direct relationship.
    Detection risk is a component of audit risk. If you increase your detection risk, your audit risk will increase. But because it is just a component of audit risk, it is not going to change by the same amount… is that what you were wondering about?

    AUD 93 Jan 16
    BEC 83 Feb 16
    FAR 83 Apr 16
    REG 84 May 16

    99% Ninja MCQ only

    February 4, 2016 at 12:27 am #756688
    Skynet
    Participant

    In Accounting there is no Direct Relationship.

    In Real Life then Yes!!!

    Example: If you are CHEATING on your girlfriend you have a High Detection Risk that your Girlfriend will find out and Get Caught. You will also have an High Audit Risk as your Girlfriend will be looking through your Social Media Accounts, Phone, and Receipts to verify that you are cheating on her.

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