Control risk is the risk that a material misstatement could occur in a relevant assertion and not be prevented or detected on a timely basis by the client’s internal control (140).are all representations of inherent risk (139). Factors such as inconsistent profitability, going concern problems, questionable reputation, etc. Inherent risk represents the possibility of material misstatement of an assertion before considering the client’s internal control.The risk of material misstatements may be separated into two components known as inherent risk and control risk. The audit risk model contains four components known as inherent risk, control risk, detection risk, and finally audit risk. It is the risk that auditors will issue an unqualified opinion on financial statements that contain a material departure from GAAP. SUBJECT: Evaluation of Comptronix CorporationĪudit risk refers to the possibility that the auditors may unknowingly fail to appropriately modify their opinions on financial statements that are materially misstated (137). The text source in this case study are referenced from Principles of Auditing, 18th edition. Analytical procedures were necessary for reviewing the company, along with problem solving to conclude the final issue.

It reviews a fraudulent company named Comptronix, firstly explaining the audit risks involved in Accounting, then evaluating the audit procedures that initially failed, as well as discovering the misappropriation of assets by internal control. The following document is a case study I worked on in my Auditing 372 course at DePaul University.

Audit risk case study