The Audit Risk Model
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- เผยแพร่เมื่อ 24 ก.พ. 2019
- The audit risk model shows audit risk (the risk the auditor will issue an incorrect opinion when the financial statements are materially misstated) as a function of 3 factors: (1) inherent risk, (2) control risk, and (3) detection risk. Inherent risk is the susceptibility of an account to material misstatement in the absence of internal controls; inherent risk is based on the business environment, the nature of the transactions, and the integrity of the client's management. Control risk is the likelihood that a material misstatement will not be caught by the client's internal controls. Inherent risk and control risk, taken together, are referred to as the risk of material misstatement. The risk of material misstatement (sometimes called client risk) is the risk that the financial statements will contain a material misstatement before the auditor gets involved. The auditor has no control over the risk of material misstatement, but must assess the risk of material misstatement in order to set detection risk accordingly. Detection risk is the risk that the auditor will fail to catch a material misstatement that is not caught by the client's internal controls. When the risk of material misstatement is high, the auditor should set the detection risk to a low level to ensure that audit risk remains low. The auditor reduces detection risk by conducting more substantive tests. Thus, the higher the risk of material misstatement, the more testing the auditor needs to conduct. There is therefore an inverse relationship between the risk of material misstatement and detection risk.
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my teacher spent 3 hours on this topic, and I'm still confused. You make it super clear in 7 mins!!!!! We need more university professors like you
Thank you!
th-cam.com/video/jB5vgCPS2jI/w-d-xo.html explained in hindi
Completely agree
i've read the book for 30 minutes and couldn't understand the model, so i decided to google it and found your video which explained the topic clearly in 7 minutes. thank you
Glad I could help!
I was always so confused while studying topic about Audit risks but now I am 100% clear about the relationship between RMMS and DETECTION RISK. I would like to request to upload a video about explaining Material Misstatement at a Financial Level as a whole
Great video! I have been banging my head against a wall with my school readings trying to understand this and your video cleared everything up. Thanks for the help.
Now I understand audit risk even better. Thank you
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not only your simple way of explanation I like, but your voice tune is comfortable to hear
THANK YOU VERY MUCH FOR THIS KNOWLEDGE
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after scrolling up and down screen to read lengthy and boring materials for next class, I decided to find something more interesting and much more clear cut on TH-cam and this video is such a treasure. Fully understand the topic in 7 minutes. Thanks so much
You are the best Audit teacher!!
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Thank you my friend!
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Perfect explanation with the examples in the end!
Thanks! 😃
Thank You so much
Thank you!!!
thank you for making it so easy to understand.
Glad it was helpful!
Thankyou so much for this
I have many years' experience doing audit work,
but have to go back and take an audit subject in order to become a qualified accountant & auditor.
I ordered my textbook and am annoyed by how verbose it is.
So just going to watch your youtube videos from now on which seem to summarise everything in my textbook in less than 1 day's worth of watching youtube.
thank you
Excellent explanation
Thanks!
GREAT EXPLAINATION
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Thank you!
Really helpful 🤘🏻
Glad you think so!
amazing
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been confused for so many hours already haha why would the dr be lower down when rmm is high. i thought it should be high as well since rmm are high, why should we lower that 😅 so now i know the answer. it is because we will do a lot of testing which will make the detection risk low 😌
Please how can we measure audit risk?
better than the teacher lol thank you
What note taking app do you use?
Camtasia with a Wacom Bamboo tablet
Can you give me translation, please? Thank you
This vídeo would be perfect with other fonts. These are very hard to understand sometimes.
ISA200 paragraph A42-A46 in just 8 minutes
My teacher straight up talking nonstop for 3 hr. He not explaining clearly like you . not even using power point of slide.
thank you
You're welcome!