Acceptable audit risk and planned detection risk are inverselyAcceptable audit risk and planned detection risk are inversely related; i.e., as acceptable audit risk increases, planned detection risk should decrease, ceteris paribus. ( )
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All known related parties must be identified and included in the auditor’s permanent files related to the client. ( )
Two major factors that affect acceptable audit risk are the likely users of the financial statements and the likelihood of issuing an unqualified audit opinion. ( )
The most important element of the audit risk model is control risk.( )
When internal controls are not effective, then substantive audit tests are less reliable; thus, the extent of substantive tests should be reduced. ( )