Audit Risk Calculator Tool

Audit Risk Calculator

Audit Risk Calculator

Audit Risk Calculator

Component Description
Inherent Risk The risk of material misstatement in the financial statements due to errors or fraud, assuming no related controls.
Control Risk The risk that a material misstatement will not be prevented or detected on a timely basis by the company’s internal controls.
Detection Risk The risk that the auditors’ procedures will not detect a material misstatement.
Audit Risk The overall risk that the auditors may unknowingly fail to appropriately modify their opinion on financial statements that are materially misstated.
Formula Audit Risk = Inherent Risk × Control Risk × Detection Risk
Purpose Used to assess and manage the risk of issuing an incorrect audit opinion.

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