Week 3 - Control Risk

Question 1

What is control risk?

Answer 1

The risk that the client’s internal control procedures will fail to detect a material error or misstatement

Question 2

What are the first 3 examples of control risk?

Answer 2

• the attitude of the directors and management
• the level of supervision in the business
• the integrity of staff and management

Question 3

What are the other 3 examples of control risk?

Answer 3

• the internal controls present in the system
• the number of locations and/or branches
• staff turnover during the year