Mployee theft of inventory from the warehouse because there are no restrictions on warehouse access and

the client does not reconcile inventory on hand to recorded amounts on a timely basis.

A: Acceptable audit Risk

B: Control Risk

C: Inherent Risk

D: Planned detection Risk

The correct answer is letter "B": Control Risk.

Explanation:

Control risk involves all the steps companies take to potential losses or to minimize them when they happen. Control risk aims to spot weak aspects of the company, whether material or not, that could affect the firm's operations, and once spotted, eliminate them assuring minimal damage.

Thus, by implementing a better control risk system, the company in the example would have avoided the theft of inventory.