The audit risk model: An empirical test for conditional dependencies amongassessed component risks

Professional standards and prior theoretical research indicate that assesse d audit risk components should be conditionally dependent. In an experiment , experienced auditors made the risk assessments that are, in practice, inp uts for using the audit risk model for planning the extent of detailed test ing. Conditional dependencies were tested using a sequential linear modelin g process that added the previously assessed risk components to the model ( e.g., inherent risk assessments added to predict subsequent control risk as sessments) as the last independent variable. Results showed that the previo usly assessed risk substantially increased the explanatory power of the mod els in accounting for variation in the subsequently assessed components. Th e results support the notion that audit risk components are assessed condit ionally. Thus, they provide a defense for practitioners' claims that they a re appropriately using the model and give guidance to future research on th e audit risk model.