Choose audit risk, a component risk, RMM, or a detection-risk planning ceiling. Enter percentages or decimals; the calculator converts units and applies a simplified numerical model.

Apply the simplified numerical model AR = IR × CR × DR.

Susceptibility to material misstatement before considering controls.

Risk that internal controls fail to prevent or detect a material misstatement in time.

Risk that audit procedures miss an existing material misstatement.

Related Calculators

Audit Risk Formula

The following simplified numerical model represents the relationship among audit-risk components. It is not a validated measurement of actual 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 the risk of expressing an inappropriate audit opinion when financial statements contain a material misstatement.

FAQ

What is audit risk?

Audit risk concerns an inappropriate opinion on materially misstated financial statements. The numerical model cannot replace sufficient appropriate audit evidence.

What is inherent risk?

Inherent risk describes susceptibility to a material misstatement before considering related controls.

What is control risk?

Control risk is the risk that internal controls do not prevent or detect a material misstatement in time.

What is detection risk?

Detection risk is the risk that audit procedures miss an existing material misstatement. In planning mode, the calculator caps the mathematical ceiling at 100%; this does not authorize omitting required audit procedures.