Which of the following is the best definition for audit risk?

		The risk that there is a misstatement based on the complexity of an entity or its industry.
		The risk that the auditor will express an inappropriate audit opinion when the financial statements are materially misstated.
		The risk that a client's internal controls will not detect a material misstatement.
		The risk that an auditors procedures will not detect a material misstatement.

Solutions

Expert Solution

The Answer is “The risk that the auditor will express an inappropriate audit opinion when the financial statements are materially misstated”

- The Audit Risk is the risk that the auditor will express an inappropriate audit opinion when the financial statements are materially misstated

- Auditors plan his works in such a way that the level of audit risk is acceptably at lower level at which will depend upon the auditors perceptions

- The Audit Risk are classified into 3 types, (1) Inherent Risk(IR), (2) Control Risk(CR), and (3) the Detection Risks(DR)

- Inherent Risk and the Control Risks are called together as the Risk of Material misstatement

- The Audit Risk is the Function of the Risk of Material Misstatements and the Detection Risk

ekkarill92 answered 1 year ago

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