Assume for client x that inherent risk is assessed 30%, control risk is assessed

Question

Assume for client x that inherent risk is assessed 30%, control risk is assessed at 100%, audit risk is 5% and detection risk is therefore determined to be 17%. Assume for client z that inherent risk is assessed at 100%, control risk is assessed at 100%, audit risk is 1 %, and detection risk is therefore determined to be 1%. What is true about the amount of audit work that will need to be conducted? Client X will require more audit work than client Z Client Z will require more audit work than Client X Both clients will require similar amount of audit work The auditor will most likely resign from the client Z audit because the inherent risk and control risk are so high

Explanation / Answer

Ans) C. Both clients will require similar amount of audit work. Audit was influence by the audit risk and inherent risk in the problem client X have more audit risk and client Z have more audit risk so we better to have same level of audit on two companies

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