________ risk represents the auditor's assessment of the susceptibility of an assertion to material misstatement,before considering the effectiveness of the client's internal control.
A)Material
B)Account balance
C)Control
D)Inherent

Question

Quizplus · Accepted Answer

Inherent risk represents the risk of material misstatement before considering the effectiveness of internal controls. This refers to the inherent characteristics of the assertions made by the client, such as the complexity or subjective nature of the underlying transactions or events. The other options are either related to the client's internal control (control risk) or the specific accounts reported in the financial statements (account balance risk), which are assessed in addition to inherent risk. Materiality is a separate concept that relates to the significance of potential misstatements to financial statement users.

________ Risk Represents the Auditor's Assessment of the Susceptibility of an Assertion