Risk of incorrect rejection 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 exists when it does not exist
C)the risk that an auditor incorrectly rejects a client
D)the risk that management may reject the audit opinion issued by the auditor

Question

Quizplus · Accepted Answer

The risk of incorrect rejection, also known as Type I error, occurs when the auditor incorrectly concludes that a material misstatement exists in the financial statements when it actually does not. This can lead to unnecessary additional work and can strain the relationship between the auditor and the client.

Risk of Incorrect Rejection Is Defined as _______