Answer
The audit risk model expresses audit risk as the product of inherent risk, control risk, and detection risk: AR = IR x CR x DR. Audit risk is the risk the auditor gives an inappropriate opinion when the statements are materially misstated. The auditor assesses IR and CR (risk of material misstatement) and adjusts detection risk (via procedures) to keep audit risk acceptably low.
Audit Risk = Inherent Risk x Control Risk x Detection Risk
RMM (risk of material misstatement) = IR x CRReal-world example Assessing high inherent and control risk, the auditor lowers detection risk by doing more extensive substantive testing.