24 December 2013
Assertion level risks are risks that are limited to one or more specific assertions in an account or in several accounts, for example , the valuation of inventory or the occurrence of sales. Assertion level risks are addressed by the nature , timing, and extent of further audit procedures , which may include substantive procedures or a combination of tests of controls and substantive procedures . The risk of material misstatement at the assertion level has two components : Inherent Risk ( IR) , which is the susceptibility of an assertion to a material misstatement , assuming that there are no related controls. Inherent risk is greater for some assertions and related account balances , classes of transactions , and disclosures than for others. Control Risk ( CR ) , which is the risk that a material misstatement that could occur in an assertion will not be prevented or detected by the entity's internal control on a timely basis . Control risk is a function of the effectiveness of the design and operation of the entity's internal control .
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