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Which statement best explains Inherent risk?

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Question ID #25914 UPSC UPSC EPFO APFC 2026 Mock Test Series UPSC EPFO APFC Auditing Sectional Test 2026 Medium

Which statement best explains Inherent risk?

Correct Answer: C. Susceptibility of an assertion to material misstatement before considering related controls
Inherent risk: Susceptibility of an assertion to material misstatement before considering related controls

Question: Which statement best explains Inherent risk?

A. Application of audit procedures to less than 100 percent of items in a population

B. Risk that a material misstatement will not be prevented or detected and corrected by internal control

C. Susceptibility of an assertion to material misstatement before considering related controls

D. Information used by an auditor in arriving at conclusions on which the audit opinion is based

Correct Answer: C. Susceptibility of an assertion to material misstatement before considering related controlsInherent risk: Susceptibility of an assertion to material misstatement before considering related controls

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Which statement best explains Inherent risk? - MCQ Explanation

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Correct answer: C. Susceptibility of an assertion to material misstatement before considering related controls