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Hi,
Just wondering what the main procedures are to assess risk?
There is
inherent risk- is this assessed by asking directors questions and comparing to industry averages? What is the most specific way to define this so i will get exam marks?
Control risk- is this assessed by the internal controls of the company.. how do you define this?
Detection risk can be managed by auditors.
I am wondering if there are other procedures to detect risk? Also is there like a overall risk of entity at the planning stage?
Thansk
Inherent risk is assessed by the auditors – nature of business, experience of client, nature of transactions (eg cash based = risky) staff etc. Can’t really be managed by the auditors but can be assessed by them.
Thank you. So control risk is assessed when establishing and testing the businesses controls? And detection risk is managed by sample sizes and tests and procedures performed?
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