In short
Control risk is the risk that a material misstatement in an assertion won't be prevented, or detected and corrected on time, by the entity's internal control.
Key takeaways
- If the auditor doesn't plan to test controls, control risk is assessed at the maximum.
- A lower assessment must be supported by tests of controls and allows less substantive testing.
- Like inherent risk, it exists independently of the audit; the auditor assesses it but can't change it.
Where it's tested
AUD: Assessing Risk of Material Misstatement — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
When the auditor assesses control risk at the maximum, this means the auditor: