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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.
individual with a higher degree of absolute risk aversion to optimally choose an alternative which all individuals view as riskier than that which is chosen by an agent with a lower degree of absolute risk aversion. Previous notions of what it means for one agent to be more risk averse than another are discussed in Section 2. In Section 3 an intuitive deï¬nition of more risk averse is proposed for situations in which preferences can be stated overlevelofriskandexpectedpayoï¬alone.