Auditors do not create or control inherent risk; they can only try to assess its magnitude.

Question

Quizplus · Accepted Answer

Auditors are not responsible for creating or controlling the inherent risk present in a client's operations or financial statements. Rather, they must identify and evaluate this risk in order to plan their audit approach and determine the nature, timing, and extent of audit procedures needed to obtain sufficient evidence. By understanding the underlying risk factors that affect a client's performance and financial reporting, auditors can better assess the potential for material misstatements or fraud, and adjust their audit plan accordingly. However, they cannot eliminate or prevent inherent risk altogether.

Auditors Do Not Create or Control Inherent Risk; They Can