Difference between inherent risk and control risk Buggest observation find during the course of audit career

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Inherent risk is the risk of material misstatement without considering internal controls, while control risk is the risk that a material misstatement will not be prevented or detected by internal controls.

Inherent risk is related to the nature of the business, industry, and environment in which the entity operates.
Control risk is related to the effectiveness of internal controls in preventing or detecting material misstatements.
Inherent risk is assessed before considering the effectiveness of internal controls, while control risk is assessed after considering internal controls.
Examples of inherent risk factors include complexity of transactions, industry regulations, and management integrity.
Examples of control risk factors include the design and implementation of internal controls, monitoring activities, and segregation of duties.

Difference between inherent risk and control risk Buggest observation find during the course of audit career

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