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Inherent Risk (accounting)
Inherent risk, in a financial audit, measures the auditor's assessment of the likelihood that there are material misstatements due to error or fraud in segment before considering the effectiveness of internal control. If the auditor concludes that a high likelihood exist, the auditor will conclude that inherent risk is high. See also *Inherent risk Inherent risk, in risk management, is an assessed level of raw or untreated risk; that is, the natural level of risk inherent in a process or activity without doing anything to reduce the likelihood or mitigate the severity of a mishap, or the amoun ... * Control risk References {{reflist * Jackson & Stent, 2010: Auditing Notes for South African Students (7th Edition) Auditing terms ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Audit
A financial audit is conducted to provide an opinion whether "financial statements" (the information is verified to the extent of reasonable assurance granted) are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organization. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.Arens, Elder, Beasley; Auditing and Assurance Services; 14th Edition; Prentice Hall; 2012 Overview The audit opinion is intended to provide reasonable assurance, but not absolute assurance, that the financial statements are presented fairly, in all material respects, and/or give a true and fair view in accordance with the financial re ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inherent Risk
Inherent risk, in risk management, is an assessed level of raw or untreated risk; that is, the natural level of risk inherent in a process or activity without doing anything to reduce the likelihood or mitigate the severity of a mishap, or the amount of risk before the application of the risk reduction effects of controls. Another definition is that inherent risk is the current risk level given the existing set of controls, which may be incomplete or less than ideal, rather than an absence of any controls. Inherent risk is contrasted with residual risk, which is the amount of risk left after treatment and added security measures. See also * Inherent risk (accounting), particularly, the consideration of the probability of material misstatements in financial records References Risk_management Auditing terms {{tech-stub ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Control Risk
Audit risk (also referred to as residual risk) as per ISA 200 refers to the risk that the auditor expresses an inappropriate opinion when the financial statements are materiality misstated. This risk is composed of: * Inherent risk (IR), the risk involved in the nature of business or transaction. Example, transactions involving exchange of cash may have higher IR than transactions involving settlement by cheques. The term ''inherent risk'' may have other definitions in other contexts.; *Control risk (CR), the risk that a misstatement may not be prevented or detected and corrected due to weakness in the entity's internal control mechanism. Example, control risk assessment may be higher in an entity where separation of duties is not well defined; and * Detection risk (DR), the probability that the auditing procedures may fail to detect existence of a material error or fraud. Detection risk may be due to sampling error or non-sampling error. Audit risk can be calculated as: :A ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
