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AUDTT RISK MODEL PROBLEM ABC&Co. is an audit and assurance firm which has recently accepted...

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Accounting

AUDTT RISK MODEL PROBLEM

ABC&Co. is an audit and assurance firm which has recently accepted the audit of Banco de oro (BDO) . During the planning of the audit, engagement manager has noted the following information regarding BDO for consideration in the risk assessment of the assignment:

  • BDO is a listed company operating in the financial services sector
  • BDO has a large network of subsidiaries, associates and foreign branches
  • The company does not have an internal audit department and its audit committee does not include any members with a background in finance as suggested in the corporate governance guidelines
  • It is the firm's policy to keep the overall audit risk below 10%
  • Assumed control risk is 50% and inherent is 60%

Required:

Compute for the planned detection risk?

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