When an entity moves into a significant new line of business, all of the following increase except:
A)client risk.
B)acceptable audit risk.
C)risk of material misstatement.
D)entity business risk.

Question

Quizplus · Accepted Answer

When an entity moves into a significant new line of business, the risk of material misstatement, client risk, and entity business risk all increase due to the unfamiliarity and complexity of the new business. However, acceptable audit risk should decrease as the auditor may need to increase the level of assurance obtained to mitigate the increased risks.

When an Entity Moves into a Significant New Line of Business