1. Material misstatements refer only to intentional misstatements that exist in a transaction or financial statement account balance.
2. Performance materiality is set less than overall materiality and helps the auditor determine the extent of audit evidence needed.
3. Detection risk is the susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be material before consideration of related controls.
4. Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated.
5. Inherent risks at the financial statement level include factors that could threaten the fundamental financial viability of the organization.
6. Inherent risk at the financial statement level is not affected by the competence and integrity of management or their potential incentives to misstate the financial statements.
7. Some level of control risk is always present in an organization because of the inherent limitations of internal control.

  • CreatedSeptember 22, 2014
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