Inherent risk is best defined as:
a) The risks that remains after management executes its risk responses.
b) The internal and external risks that exist assuming there are no internal controls in place.
c) The amount of risk an organization is willing to accept in pursuit of its business objectives.
d) The risk that material error exists in the financial statements after the audit.
Ans: b) The internal and external risks that exist assuming there are no internal controls in place.
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