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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Inherent risk & Business risk
Please differentiate between Inherent Risk and Business Risk? Is there any relation of Business risk with audit risk model?
Business risk is not examinable in AA but essentially most business risks are a source of inherent risk i.e. they could ultimately give rise to misstatement in the financial statements. So, for example, giving credit to customers is a business risk (because they may not pay) – the risk of misstatement is insufficient allowance for credit losses.