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The Audit Risk model expresses audit risk as:
AIR − CR + DR
BIR × CR × DR
CIR + CR + DR
DIR / (CR × DR)
Answer & Solution
Correct answer: C. IR + CR + DR
1. Audit Risk = IR × CR × DR - multiplicative model from SA 200.
2. IR and CR cannot be controlled by the auditor; only DR is.
3. DR is adjusted via nature/timing/extent of further procedures.
_Source: ICAI BoS CA Final Paper 3, Ch 3 "Risk Assessment and Internal Control"_
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