Inherent risk is
A)the susceptibility of management assertions in an accounting business process to a material misstatement assuming no internal controls
B)the risk that internal controls fail to prevent or detect misstatements in the financial statements
C)the risk that substantive audit procedures fail to detect misstatements in the financial statements
D)the risk of assuming a clean opinion when the financial statements are materially incorrect

Question

Quizplus · Accepted Answer

Inherent risk refers to the susceptibility of management assertions in an accounting business process to a material misstatement assuming no internal controls. It is a risk that exists independently of internal controls and is influenced by factors such as the nature of the account balance, transaction class, or disclosure involved.

Inherent Risk Is