Enter the inherent risk, control risk, and detection risk into the calculator to determine the audit risk.

Audit Risk Formula

The following formula is used to calculate the audit risk. 

AR = IR * CR * DR
  • Where AR is the audit risk
  • IR is the inherent risk
  • CR is the control risk
  • DR is the detection risk

To calculate the total audit risk, multiply the inherent risk, control risk, and detection risk together.

Audit Risk Definition

Audit risk is defined as a total risk associated with the error within an audit.

FAQ

What is audit risk?

Audit risk is a risk that an auditor issues to an unqualified report due to the auditor’s failure to detect error or fraud.

What is inherent risk?

Inherent risk is the risk involved in the nature of a certain business.

What is control risk?

Control risk is that arises from a business’s failure of internal control mechanisms.

What is detection risk?

Detection risk is the risk that the auditing procedures may fail to detect error or fraud, such as sampling error.