ACCA AA · Chapter 6 · Question 8 of 11
Under ISA 315 (Revised 2019), which of the following is NOT an inherent risk factor?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The effectiveness of the entity's monitoring of controls
Explanation
ISA 315 identifies inherent risk factors including complexity, subjectivity, change, uncertainty and susceptibility to misstatement due to management bias or other fraud risk factors. The monitoring of controls is a component of internal control and therefore relates to control risk, which is assessed separately from inherent risk.
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