Inherent Risk (IR)
- The natural risk that an account will be misstated before considering any controls.
- Depends on the nature of the business and the account.
- Higher when:
- Complex transactions
- Estimations (e.g. allowance for doubtful debts)
- Cash-based businesses, easily stolen
Example: Inventory in a fashion store (risk of obsolete stock) → high inherent risk.
Tiada ulasan:
Catat Ulasan