Question
In: Accounting
Which of the following is the best definition for audit risk?
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 2 years agoRelated Solutions
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