control risk

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The risk that misstatements in the financial statements of a company will not be prevented or detected on a timely basis by the internal control system of a business. It is a part of the audit risk; an assessment of the control risk must be made for each audit objective. In assessing the control risk, an auditor will need to be familiar with the accounting and internal control system and test its effectiveness in operation by means of compliance tests.

Subjects: Accounting.

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