Control risk is
A)The probability that a material misstatement could not be prevented or detected by the entity's internal control policies and procedures.
B)The probability that a material misstatement could occur and not be detected by auditors' procedures.
C)The risk that auditors will not be able to complete the audit on a timely basis.
D)The risk that auditors will not properly control the staff on the audit engagement.

Question

Quizplus · Accepted Answer

Control risk is the risk that a material misstatement could not be prevented or detected by the entity's internal control policies and procedures. It is one of the three components of audit risk, along with inherent risk (the risk that arises from the nature of the client's business) and detection risk (the risk that the audit procedures will not detect a material misstatement). Option B is incorrect because it describes detection risk, not control risk. Options C and D are irrelevant to the concept of control risk.

Control Risk Is