Question

As the acceptable level of detection risk increases, an auditor may change the?

Answer 1

Acceptable level of detection risk means the amount of acceptable reliance an auditor put on companies management to control the frauds and risk of misstatements. If the acceptable level of detection risk is higher then it means that the internal control of the company is sound and well planned and detecting the loopholes well in time and in effective way.

Hence from above it can be inferred that the as the acceptable level of detection risk increases, an auditor may change the timing of the essential and substantive test to identify the detection risks in between of the financial year instead of, at the end of year.

As this will not lead to unidentified risks after the testing period due to well aligned and established internal control with in the company.