Assuming a lack of internal control in a client's system, the risk of material misstatement is known as?
A)Audit risk
B)Detection risk
C)Inherent risk
D)Client risk

Question

Quizplus · Accepted Answer

Inherent risk refers to the risk of material misstatement existing in the client's system, assuming a lack of internal control. Audit risk is the overall risk that the audit fails to detect material misstatements. Detection risk is the risk that the auditor fails to detect material misstatements during the audit. Client risk is not a commonly used term in auditing.

Assuming a Lack of Internal Control in a Client's System