risk of material misstatement

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Relationship between detection risk and audit risk.

Audit risk is the possibility that auditor issue an inappropriate opinion that is he says financial statements does not contain material misstatement when actually they do.

Audit risk is made by three types of risk which are an inherent risk, control risk, and detection risk.



Inherent risk is the risk that financial statements … Read the rest

What is risk of material misstatement?

What is the risk of material misstatement?

The risk of material misstatement is the risk that financial statements are materially misstated prior to the audit. It is the risk that the figures and disclosure in the financial statement are not in accordance with the accounting standards and the acceptable financial reporting framework.

The risk of material misstatement consists of two components, namely inherent risk and control risk

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Inherent risk in auditing - meaning

Inherent risk in auditing – meaning

Inherent risk is susceptibility of an assertion about a class of 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.



Inherent risk is the risk which an entity is exposed to due to nature of its transaction … Read the rest