Investigating new clients with a focus on assessing the auditor's potential relationship with that new client is a critical element in determining:
A) financial risk.
B) inherent risk.
C) acceptable audit risk.
D) statistical risk.

Question

Quizplus · Accepted Answer

Acceptable audit risk involves assessing the auditor's willingness to accept that the financial statements may be materially misstated after the audit is completed. Investigating new clients to understand the potential relationship helps in determining the level of acceptable audit risk the auditor is willing to take on.

Investigating New Clients with a Focus on Assessing the Auditor's