Inherent risk is defined in terms of:
A) a total absence of controls.
B) an ideal set of controls.
C) the existing controls.
D) the standard controls for the client's industry.
E) a full set of controls.

Question

Quizplus · Accepted Answer

Inherent risk is defined as the susceptibility of an assertion about a transaction, account balance, or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls. It exists independently of the audit, meaning it is present even if there are no controls in place.

Inherent Risk Is Defined in Terms Of