What Is Inherent Risk

Multiple Choice

What is inherent risk?

A) The probability that some accounts are more susceptible to misstatement than others.
B) The probability that the client's internal control policies and procedures will fail to detect material misstatements.
C) The probability that material misstatements have occurred in transactions entering the accounting system used to develop financial statements.
D) The probability that the auditor may not detect material misstatements in the financial statements.