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What term describes the systematic probability that an internal control system will fail to prevent or detect material financial misstatements?

AInherent Risk
BControl Risk
CDetection Risk
DAudit Risk

Explanation

• Control Risk is the risk that internal controls implemented by management fail to prevent, detect, or correct material misstatements in a timely manner.
• Strong internal controls lower control risk, allowing auditors to reduce substantive testing procedures.
• Ineffective controls lead to high control risk assessments.

Exam Relevance
  • Topic: Auditing
  • Subtopic: Internal Control Risk
Submitted by: mcqstutor Team More Finance & Accounting MCQs →

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