Millie Buenavista made the following two statements concerning inherent risk: (i) Inherent risk is the risk that an auditor expresses an inappropriate audit opinion when the financial statements are materially misstated.
(ii) Inherent risk deals with the susceptibility of the financial statements to material misstatements without considering internal controls.
A) both (i) and (ii)
B) neither (i) not (ii)
C) (i) only
D) (ii) only

Question

Quizplus · Accepted Answer

Inherent risk refers to the susceptibility of an assertion about a transaction, account balance, or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls. Statement (i) actually defines audit risk, not inherent risk specifically.

Millie Buenavista Made the Following Two Statements Concerning Inherent Risk