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Hi Mike,
I am a bit confused between the two? In the Acca P7 articles,it is mentioned that ROMM often follow from business rsk?? Is it ok to say that business risk and ROMM are the same?
No, they are not the same
A risk of material misstatement MAY arise as a result of an existing (or potential) business risk but not all business risks necessarily lead on to risks of material misstatement
For example, there may be a business risk of increasing competition within the area and a consequent risk of losing revenue to the new competitors. But that does not immediately lead to a risk of material misstatement
A new road is soon to be opened allowing traffic to by-pass the town and avoid passing our retail premises. It’s a business risk but not one necessarily involving risk of material misstatement
OK?
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