The risk assessment component of internal controls refers to
A) The auditor's assessment of control risk.
B) The auditor's assessment of client risk.
C) The entity's identification and analysis of risks relevant to achievement of its objectives.
D) The entity's monitoring of the potential for material misstatements.

Question

Quizplus · Accepted Answer

The risk assessment component of internal controls refers to the entity's identification and analysis of risks relevant to achievement of its objectives. This includes identifying internal and external factors that may affect the achievement of goals, and assessing the likelihood and potential impact of those risks. It is a crucial part of establishing effective internal controls. The auditor's assessment of control risk and client risk is part of the audit process and not specifically related to internal controls. The entity's monitoring of potential misstatements is also a component of internal controls, but it is not specifically related to risk assessment.

The Risk Assessment Component of Internal Controls Refers to