Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder

Exercise 34

The auditor should consider audit risk when planning and performing an examination of financial statements in accordance with generally accepted auditing standards. Audit risk should also be considered together in determining the nature, timing, and extent of auditing procedures and in evaluating the results of those procedures.
Required:
a. Define audit risk.
b. Describe the components of audit risk (e.g., inherent risk, control risk, and detection risk).
c. Explain how these components are interrelated.
(AICPA, adapted)