The risk that an auditor's procedures will lead to the conclusion that a material error does not exist in an account balance when,in fact,such error does exist is referred to as
A)acceptable audit risk.
B)inherent risk.
C)control risk.
D)planned detection risk.

Question

Quizplus · Accepted Answer

Planned detection risk is the risk that the auditor's procedures will not detect a material misstatement in an account balance. It is a combination of inherent risk and control risk. However, acceptable audit risk is the risk that the auditor is willing to accept that the financial statements may be materially misstated after the audit is completed. Inherent risk relates to the susceptibility of an account balance to material misstatements, while control risk relates to the risk that the internal control system will not effectively prevent or detect and correct material misstatements. Therefore, the risk that an auditor's procedures will lead to the conclusion that a material error does not exist in an account balance when, in fact, such error does exist is a case of planned detection risk.

The Risk That an Auditor's Procedures Will Lead to the Conclusion