A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is called:
A) statistical risk.
B) inherent risk.
C) acceptable audit risk.
D) financial risk.

Question

Quizplus · Accepted Answer

Acceptable audit risk is the measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued. It involves a balance between the risks of material misstatement and the cost of the audit. The auditor must ensure that the acceptable audit risk aligns with the level of inherent risk and control risk. Therefore, option C is the correct answer. The other options are not relevant to the definition of acceptable audit risk.

A Measure of How Willing the Auditor Is to Accept