The risk that the auditor concludes that a material misstatement exists when it does not is called _______.
A)risk of incorrect rejection
B)risk of incorrect acceptance
C)risk of incorrect statement
D)risk of incorrect valuation

Question

Quizplus · Accepted Answer

The risk of incorrect rejection, also known as Type I error, occurs when an auditor incorrectly concludes that a material misstatement exists in a financial statement when in fact it does not. This can lead to unnecessary additional work and investigation.

The Risk That the Auditor Concludes That a Material Misstatement