Audit risk is composed of 3 factors. Which of the following is NOT one of those factors? a. Compliance risk b. Detection risk c. Control risk d. Inherent risk

Break Down the Problem

1. Identify the factors that make up audit risk.
2. Determine which option does not belong to that set of factors.

Relevant Concepts

Audit risk is typically composed of three factors:

• Detection Risk: The risk that the auditor's procedures will fail to detect material misstatements.
• Control Risk: The risk that a material misstatement will not be prevented or detected on a timely basis by the entity’s internal controls.
• Inherent Risk: The risk of a material misstatement occurring in the absence of internal controls.

Analysis and Detail

• Compliance risk is related to the entity's adherence to laws and regulations but is not one of the primary components of audit risk.
• The three components of audit risk are commonly referred to as the "Audit Risk Model," expressed as: $\text{Audit Risk} = \text{Inherent Risk} \times \text{Control Risk} \times \text{Detection Risk}$

Verify and Summarize

• The question asks for a factor that is not part of the audit risk components.
• The correct factor that does not belong is compliance risk.

Final Answer

The answer is a. Compliance risk.