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Hello
I have 2 questions
1.Im having a problem identifying audit risks. I was under the impression that the assertions are what relates to the risk of material misstatement (romm) eg theres a risk that all the non current assets are not recorded..which is the completeness assertion. I am a bit confused.
2.Also the audit risk consists of control, inherent and detection risk. This therefore means that within that theres is a romm. So does this mean that if part A of the question asks for romm then i might be repeating those answers if part B asks for audit risks?
The expression “risk of material misstatement” is the way of describing the product of inherent risk and control risk
In former times, before risk of material misstatement was introduced as a key expression, audit risk was always defined as the product of inherent risk, control risk and detection risk
Now those first two are combined and referred to as risk of material misstatement
If it makes it easier for you to fit “assertions” into all this, think back to the time when audit risk was defined using the three separate elements identified above
After all, what’s in a name? Romm is simply the combination of those first two
Does that help?
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