The risk of a material misstatement occurring in an account,assuming an absence of internal control,is referred to as:
A)Account risk.
B)Control risk.
C)Detection risk.
D)Inherent risk.

Question

Quizplus · Accepted Answer

The risk of a material misstatement occurring in an account, assuming an absence of internal controls, is referred to as inherent risk. Inherent risk is the risk that exists in the absence of any internal controls, and it is an important consideration when planning an audit. The auditor assesses inherent risk for each account or assertion and uses that assessment to determine the nature, timing, and extent of audit procedures needed to reduce audit risk to an acceptable level.

The Risk of a Material Misstatement Occurring in an Account,assuming