Azerbaijan Auditor Certification Practice Questions - Azerbaijan Auditor Qualification Examination (Auditor Sertifikasiya) Exam

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In the audit risk model expressed as Audit Risk (AR) = Inherent Risk (IR) × Control Risk (CR) × Detection Risk (DR), how should the auditor respond if the assessed risk of material misstatement (IR × CR) is determined to be high?

Increase detection risk to a higher level to reduce the overall volume of audit evidence collected Eliminate inherent risk by requiring management to alter its fundamental business model Rely exclusively on management inquiry and eliminate substantive testing Set acceptable detection risk to a lower level by expanding substantive procedures, increasing sample sizes, and using more experienced staff

Correct Answer:

Set acceptable detection risk to a lower level by expanding substantive procedures, increasing sample sizes, and using more experienced staff

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