The susceptibility of an assertion to a material misstatement, assuming that there are no controls, is:
A) audit risk.
B) control risk.
C) analytical procedures risk.
D) inherent risk.
E) tests of details risk.

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. This risk exists independently of the audit, stemming from the nature of the business or the transaction itself.

The Susceptibility of an Assertion to a Material Misstatement, Assuming