As part of her yearly audit plan activities, Krystyne Sliz reviews audit working papers of previous years to determine the risk that a client's system of internal controls will not prevent or
Detect a material misstatement. This review refers to
A) audit risk.
B) inherent risk.
C) control risk.
D) detection risk.

Question

Quizplus · Accepted Answer

Reviewing audit working papers of previous years to determine the risk that a client's system of internal controls will not prevent or detect a material misstatement refers to control risk, which is the risk that a material misstatement could occur in the financial statements and not be detected or prevented by the entity's internal control system. Audit risk is the risk that an auditor expresses an inappropriate audit opinion. Inherent risk is the susceptibility of a material misstatement in the absence of any internal controls, and detection risk is the risk of the auditor failing to detect a material misstatement.

As Part of Her Yearly Audit Plan Activities, Krystyne Sliz