1 Use arrow keys to expand/collapse, and navigate this outline. 2  When revisiting this page, be sure to perform a page refresh (in your web browser) to load the latest version. 3  To search this document, click the expand link located on the top left of this page, and then use the Find command in your web browser.
Hello everyone. I want to discuss two key elements of audit risk and how they made perfect sense while studying them. So inherent risk is the risk of misstatement assuming no controls are in place, while control risk is the risk of misstatement if the controls dont work. These are the two elements of audit risk that the auditor doesnt control, but are very important.
Audit risk is a function of the risks of material misstatement and detection riskâ. Hence, audit risk is made up of two components â risks of material misstatement and detection risk. Risk of material misstatement is defined as âthe risk that the financial statements are materially misstated prior to audit. This consists of two components... inherent risk ...