If inherent risk is considered at the assertion level,why does the nature of the client's business affect inherent risk?
A)Certain accounts,such as inventory,are affected by the nature of the client's business.
B)If the client has very basic manufacturing processes,inherent risk is low.
C)When there is a risk of technological obsolescence,a specialist must be used during the engagement.
D)Accounts such as cash,notes,and mortgages payable vary depending upon the type of business.

Question

Quizplus · Accepted Answer

The nature of the client's business can affect certain accounts, such as inventory, which can influence inherent risk at the assertion level. For example, a retail business with a high volume of inventory is more susceptible to risks such as theft or spoilage than a service-based business with low inventory levels.

If Inherent Risk Is Considered at the Assertion Level,why Does