Ch 3 · Risk Assessment & Internal Control

5 concept points · 2 formulas · 4 exam-critical points.

📘 Core concepts

• 1SA 315 — Identify & assess Risks of Material Misstatement (RoMM).
• 2Components of internal control: Control Environment, Risk Assessment, Information System, Control Activities, Monitoring.
• 3Walkthrough tests confirm understanding of system; ToC tests operating effectiveness.
• 4Inherent risk × Control risk = RoMM; detection risk inversely proportional to RoMM.
• 5Auditor's response (SA 330): overall responses + further audit procedures (test of controls + substantive).