What is the role of internal controls during the assessment of inherent risk?
A)Internal controls are considered separately,so they are ignored during the assessment of inherent risk.
B)As the quality of internal controls increases,inherent risk decreases.
C)As the quality of internal controls improves,inherent risk increases.
D)There is a direct relationship between the quality of internal controls and inherent risk.

Question

Quizplus · Accepted Answer

Inherent risk is assessed independently of internal controls. It represents the susceptibility of an assertion to a material misstatement assuming there were no related controls. Therefore, the quality or existence of internal controls is not considered when assessing inherent risk.

What Is the Role of Internal Controls During the Assessment