What does the effectiveness of internal controls influence?
A)Inherent risk.
B)Control risk.
C)Risk of material misstatement.
D)Both B and C.

Question

Quizplus · Accepted Answer

The effectiveness of internal controls can influence both the control risk (ability of the internal control to prevent or detect material misstatements) and the risk of material misstatement (the risk that material misstatements may occur in the financial statements). The inherent risk (risk associated with the nature of the financial information being audited) is generally unaffected by the effectiveness of internal controls.

What Does the Effectiveness of Internal Controls Influence