The probability that an account balance might be misstated after processes are complete and internal controls have been applied is

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Residual risk refers to the risk remaining after internal controls and other risk management efforts have been applied. It represents the overall level of risk that an organization is exposed to, including the risk that an account balance might be misstated despite the application of controls. Business risk refers to risks related to the operations of a business, while audit risk refers specifically to the risk that an auditor might issue an incorrect opinion on financial statements. Control risk relates to the risk that an error or fraud could occur in a specific area due to inadequate or ineffective internal controls.

The Probability That an Account Balance Might Be Misstated After