💰 CPA Exam Prep

The audit risk model is: Audit Risk = IR × CR × DR. If IR and CR are high, the auditor should:

A Increase detection risk
B Decrease detection risk by performing more substantive procedures
C Issue a disclaimer
D Rely more on controls

✓ Correct Answer: Option B

When inherent and control risks are high, auditors must reduce detection risk through more extensive substantive testing.

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