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Guys I am sorry for bombarding the forum with questions, but in need of help.
Is there any way to identify which one will be control and which will be inherent risk?
For example:
Identify in the following which involve Control/Inherent risk:
1. A good portion of entity’s fixed asset base consists of capitalized leasehold items.
2. Entity keeps a large quantity of cash.
3. Entity’s financial statement do not require use of significant estimates.
4. Employees report hours without supervisor approval.
Ans:
1,2,3. Inherent risk and 4. Control risk.
How to differentiate between control and inherent? Does anyone have any trick?
Can someone please give some ideas. thanks.
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