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Definition of words
Planned detection risk
a measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding the performance materiality amount, should such misstatements exist
Control risk
a measure of the auditor's assessment of the likelihood that misstatements exceeding a performance materiality in a segment will not be prevented or detected by the client's internal controls
Acceptable audit risk
a measure of how much risk the auditor is willing to take that the financial statements may be materially misstated after the audit is completed and an unqualified audit opinion has been issued
Performance materiality level
the materiality allocated to any given account balance
Preliminary judgment about materiality
the maximum amount by which the auditor believes that the statements could be misstated and still not affect the decisions of reasonable users
Audit assurance
This term is synonymous with acceptable audit risk
Materiality
the magnitude of an omission or misstatement of accounting information that makes it probable that the judgment of a reasonable person would have been changed
Inherent risk
a measure of the auditor's assessment of the likelihood that there are material misstatements before considering the effectiveness of internal control
an increase in acceptable audit risk
decrease evidence
an increase in inherent risk
decrease evidence
a decrease in control risk
decrease evidence
an increase in planned detection risk
increase evidence
an increase in performance materiality
decrease evidence
