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Probe | How is Risk of Material Misstatement calculated?
Probe | How is Risk of Material Misstatement calculated?
Published: 24/07/2023
How is Risk of Material Misstatement (ROMM) calculated?
Answer:
We have a very nice video on ROMM (Risk of Material Misstatement), click
here
to watch.
Risk of material misstatement is made up of the following:
Risk assessment at assertion level for inherent risk – 11.60
Risk assessment at assertion level for fraud risk – 11.60
Specific materiality for the line item – 11.60
Risk assessment at financial statement level for inherent risk – 11.20
Risk assessment at financial statement level for fraud risk – 11.25
Risk assessment at financial statement level for control risk – 11.30
If a section is material you can never have a ROMM lower than medium.
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