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Question 48

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Premises:
The risk that a material misstatement that could occur in an assertion will not be prevented or detected on a timely basis by the entity’s internal controls.
The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that contain a material misstatement.
The risk that the auditor will not detect a material misstatement that exists in an assertion.
The susceptibility of an assertion to a material misstatement assuming that there are no related internal controls.
Responses:
Audit Risk
Inherent Risk
Control Risk
Detection Risk

Correct Answer:

The risk that a material misstatement that could occur in an assertion will not be prevented or detected on a timely basis by the entity’s internal controls.
The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that contain a material misstatement.
The risk that the auditor will not detect a material misstatement that exists in an assertion.
The susceptibility of an assertion to a material misstatement assuming that there are no related internal controls.
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