Question

	Case 1	Case 2	Case 3	Case 4	Case 5	Case 6	Case 7	Case 8
IR	25%	40%	60%	70%	70%	70%	95%	60%
CR	50%	50%	60%	100%	50%	70%	40%	50%
AR	3%	4%	5%	5%	2%	1%	3%	1%
DR

Help with an Audit Risk

Using your excel template, calculate DR.

1. Which case will require the most audit work?

2. Which case will require the least audit work?
3. Using Case 1 as an example. If AR is changed to 4 % will the amount of audit work performed INCREASE or DECREASE?
4. *Please help with this practice for my class and exam* I will be grateful

Answer 1

AR=IR*CR*DR
Therefore DR=AR/(IR*CR)
	Case 1	Case 2	Case 3	Case 4	Case 5	Case 6	Case 7	Case 8
IR	25.0%	40.0%	60.0%	70.0%	70.0%	70.0%	95.0%	60.0%
CR	50.0%	50.0%	60.0%	100.0%	50.0%	70.0%	40.0%	50.0%
AR	3.0%	4.0%	5.0%	5.0%	2.0%	1.0%	3.0%	1.0%
DR	24.0%	20.0%	13.9%	7.1%	5.7%	2.0%	7.9%	3.3%

if there is higher detection risk then we only need to put lesser work and data collection on it, in contrary case if there is lower detection risk we need to put more audit work and evidence collection on it.

on the basis of above point

case 6 require most audit work

And case 1 require least audit work

if AR is changed to 4% in case 1 answer is

	Case 1
IR	25.0%
CR	50.0%
AR	4.0%
DR	32.0%

in the above case detection risk become higher therefore lower the audit procedure on them, the answer is the amount of work should be decrease