Risk assessment should evaluate whether a company's controls will sufficiently address identified risks of material misstatement due to fraud.

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Risk assessment is an evaluation of the company's controls to determine if the identified risks of material misstatement caused by fraud can be sufficiently addressed. This helps the auditor to identify areas of the financial statements that may be particularly susceptible to fraud and design procedures that address those risks.

Risk Assessment Should Evaluate Whether a Company's Controls Will Sufficiently