Control risk is the risk that:
A) an auditor expresses an inappropriate audit opinion when a financial statement is materially misstated.
B) an auditor's substantive procedures will not detect material misstatements.
C) a client's system of internal controls will not prevent or detect a material misstatement.
D) none of the above

Question

Quizplus · Accepted Answer

Control risk is the risk that a client's system of internal controls will not prevent or detect a material misstatement. It is one of the components of audit risk, alongside inherent risk and detection risk. Inherent risk refers to the risk that a material misstatement exists in the financial statements, while detection risk is the risk that auditors will fail to detect a material misstatement. Control risk can be mitigated by assessing the effectiveness of a client's internal controls and performing tests of controls to determine their reliability.

Control Risk Is the Risk That