Inherent Risk (IR) is defined as the likelihood that the financial statements are misstated before considering internal control.

Inherent Risk (IR) is defined as the likelihood that the financial statements are misstated before considering internal control.

• A. The risk that misstatements will be prevented by controls.
• B. The risk that misstatements will be detected by controls.
• C. The likelihood that the financial statements are misstated before considering internal control (that is, assuming no internal controls).
• D. The risk that the auditor will issue a wrong opinion.

Answer: (C)