The measurement of the auditor's assessment of the likelihood that there are material misstatements due to error or fraud in a segment before considering the effectiveness of internal controls is defined as:
A)audit risk.
B)inherent risk.
C)sampling risk.
D)detection risk.

Question

Quizplus · Accepted Answer

Inherent risk is the risk of material misstatement that exists in an assertion or segment before consideration of internal control. It considers the nature of the client's business, the complexity of the transactions, and the characteristics of the account balances. It is assessed by the auditors before the audit procedures are performed.

The Measurement of the Auditor's Assessment of the Likelihood That