Audit risk related problem

Plz reply.. im very confused... :(

Hi Mamta,

Audit Risk = Inherent Risk + Control Risk + Detection Risk

It is governed by SA 200 (new)

Inherent risk is susceptibility of financial statements to misstatement

Control risk is that these misstatements will not be detected by internal controls

Detection risk is that auditor may not detect these misstatements

All the above risks are different from each other and all of them CONSTITUTE audit risk.

Very nice and correct ans. given by mr.yogesh shah