Please differentiate between Inherent Risk and Business Risk? Is there any relation of Business risk with audit risk model?
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Inherent risk & Business risk
6y ago#1Business 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.
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