Risk of incorrect acceptance is defined as _______.
A)the risk that the auditor concludes that a material misstatement does not exist when it does exist
B)the risk that the auditor concludes that a material misstatement does exist when it does exist
C)the risk that an audit firm incorrectly accepts a client
D)the risk that an audit firm incorrectly issued an unmodified opinion

Question

Quizplus · Accepted Answer

Risk of incorrect acceptance pertains to the auditor's failure to recognize a material misstatement in the financial statements or a failure to modify the auditor's opinion when necessary. Therefore, the risk of incorrect acceptance is the risk that the auditor concludes that a material misstatement does not exist when it does exist. Option B is the definition of the risk of incorrect rejection. Option C is the risk of client acceptance, and option D is the risk of issuing an incorrect opinion.

Risk of Incorrect Acceptance Is Defined as _______