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inherent risk mean audit risk or business risk??if the question ask “inherent risk associated with the audit of the financial statement”means audit risk is it?
how about control risk?also means audit risk?
Audit risk is made up from inherent risk, control risk and detection risk.
thank you:) can you give me some example question about the business risk and audit risk?what’s the technique to answer this type of question?
Business risk is not on the F8 syllabus.
Audit risk will be potentially high if inherent risk is high (eg inexperienced client staff prepare the FS) and control risk is high (poor internal controls). To counter those effects, the auditor will have to keep detection risk low by doing more audit work.
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