In this lesson, the relationship between the different facets of audit risk - inherent risk, control risk, and detection risk - is examined in depth. Through various examples, it is demonstrated how these factors are inversely related to one another and how altering one can maintain or change the overall audit risk. The concept of interim testing is also discussed, highlighting its usage and implications on detection risk. With a concrete understanding of these relationships, viewers will be better equipped to tackle multiple choice questions on the CPA exam related to audit risk.
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