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

Question

Quizplus · Accepted Answer

Inherent risk represents the risk that exists in the absence of internal controls, meaning it is the susceptibility of an assertion to material misstatement before considering the effectiveness of the client's internal controls. Material risk pertains to the magnitude of the misstatement that potentially could occur, account balance risk relates to the risk associated with individual accounts or groups of accounts, and control risk represents the risk that a material misstatement will not be prevented or detected by internal control.

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