ACCY 610 Auditing Seminar Module 3 Exam 1 Practice Test

When you plan more effective substantive procedures, you improve the chance of catching misstatements. Detection risk is the risk that your procedures fail to detect a material misstatement. With stronger, better-designed substantive procedures, detection risk decreases. Since audit risk is the product of inherent risk, control risk, and detection risk, lowering detection risk reduces overall audit risk (assuming inherent and control risks stay the same). So the overall effect is to reduce both detection risk and the total audit risk. The other options imply the opposite or ignore how the risk model ties these elements together.