This document discusses different types of audit risk: inherent risk, control risk, and detection risk. It notes that inherent risk relates to the complexity of a client's business or transactions, control risk relates to whether current controls can detect or prevent errors, and detection risk is the risk that an auditor fails to detect issues or issues an incorrect opinion. The document concludes that higher inherent and control risks require lower detection risk through more audit procedures, time, larger samples, and experienced staff, while lower inherent and control risks allow for higher detection risk through smaller samples and less audit time.

1. Audit Risk
Muhammad Usama
Batch 5th BBA

2. Risk Assessment
• Identification of hazards
• Negatively impact on organization

3. Audit Risk
• Auditor issued the incorrect or inappropriate opinion to the financial
statement.
• will not deduct such misstatements during the Audit

4. Risk of Material Misstatement
• Inherent Risk: Not be protected or detected
• could happen as the result of complexity of client nature of business or
transactions.
• Control Risk: That current control could not detect or failm Protect
significant error or misstatement

5. Detection Risk:
• Auditor fails to deduct
• Issued incorrect opinion to the audited

6. PointsTo Be Remember
• If Inherent risk and Control risk are high, then Detection risk must be low, meaning that:
More audit procedures would be needed;
More time should be spent on the audit;
Sample sizes should be increased;
More experienced audit staff should be used.
• If Inherent risk and Control risk are low, then Detection risk can be high, meaning that:
Smaller samples of transactions can be tested;
Less time will be spent on the audit.

7. ThankYou!
Any Queation.