Assessing Audit Risk from Errors and Irregularities.

This article assesses audit risk in situations when the audit technology is imperfect and the auditor and auditee are interacting. The work is divided into nonstragic audit risk and strategic audit risk, the difference being the former contains accidential errors while the latter is intentional. The purpose of the study is to assist with new regulations aimed at greater detection of accounting fraud. The author bases his model on strategic-testing theory and components of decision-theoretic testing as well.