Audit Risk & Internal Control
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Terms in this set
- Audit Risk Model The framework expressing audit risk as the product of inherent risk, control risk, and detection risk.
- Inherent Risk The susceptibility of an assertion to material misstatement before considering any related controls.
- Control Risk The risk that a material misstatement will not be prevented or detected on a timely basis by internal control.
- Detection Risk The risk that the auditor's procedures fail to detect a material misstatement that exists.
- Materiality The threshold at which there is a substantial likelihood that a misstatement or omission would influence the judgment made by a reasonable user based on the financial statements.
- Internal Control The processes designed to provide reasonable assurance about reliable reporting, effective operations, and compliance.
- COSO Framework A widely used internal control framework built on five integrated components.
- Management Assertions The implicit or explicit representations management makes in the financial statements, such as existence and completeness.