The concept of recognizes that a GAAS audit may fail to detect all material misstatements.
A)Absolute assurance.
B)Due care.
C)Reasonable assurance.
D)Risk of material misstatement.

Question

Quizplus · Accepted Answer

Reasonable assurance is the concept that recognizes that a GAAS audit may fail to detect all material misstatements. This means that the auditor is not expected to provide absolute assurance that the financial statements are completely free from material misstatements, but rather provide reasonable assurance that the financial statements are free from material misstatements. This is because there is always a risk of material misstatement due to inherent limitations of an audit such as the use of sampling, judgment, and the nature of financial reporting.

The Concept of Recognizes That a GAAS Audit May Fail