AA – L2 – SA – Q5.4 – Detection Risk

Detection risk is influenced by:

 Internal audit

B   The client

C   Executive and non-executive directors

 The external auditor

D

Explanation:
Detection risk is the risk that the external auditor’s procedures fail to detect material misstatements. It is directly influenced by the auditor’s design and execution of audit procedures. Internal audit, the client, and directors may affect inherent or control risks, but detection risk is specific to the external auditor’s work. Option D is the correct answer.