When determining the inherent risk related to an account balance, an auditor theoretically does not explicitly consider the:
A)liquidity of the account.
B)degree of management estimation involved in determining the proper account balance.
C)related internal control policies and procedures.
D)complexity of calculations involved.

Question

Quizplus · Accepted Answer

When determining inherent risk related to an account balance, an auditor theoretically does not explicitly consider the related internal control policies and procedures. Inherent risk is the risk that exists in the absence of internal controls, and therefore, it is independent of any control procedures. However, internal control policies and procedures can affect the auditor's assessment of control risk and detection risk, which are the other two components of the risk audit model. Therefore, choice C is the correct answer.

When Determining the Inherent Risk Related to an Account Balance