Inherent risk and control risk differ from detection risk in which of the following ways?
A)Inherent risk and control risk are calculated by the client.
B)Inherent risk and control risk exist independently of the audit.
C)Inherent risk and control risk are controlled by the auditor.
D)Inherent risk and control risk exist as a result of the auditor's judgment about materiality.

Question

Quizplus · Accepted Answer

Inherent risk and control risk are inherent to the client's operations and systems, and may exist even if an audit is not conducted, whereas detection risk is specific to the audit and can be controlled by the auditor through testing procedures. Inherent risk and control risk are not calculated by the client, and while the auditor may assess and evaluate these risks, they cannot control them directly. Materiality is a factor in assessing inherent risk and control risk, but it is not the sole basis for these assessments.

Inherent Risk and Control Risk Differ from Detection Risk in Which