The risk that an auditor will conclude, based on substantive tests, that a material error does not exist in an account balance when, in fact, such error does exist is referred to as:
A) sampling risk.
B) detection risk.
C) non-sampling risk.
D) inherent risk.

Question

Quizplus · Accepted Answer

Detection risk refers to the risk that the auditor will fail to detect a material misstatement in an account balance. It is one of the components of audit risk, along with inherent risk and control risk. The risk that an auditor will conclude, based on substantive tests, that a material error does not exist in an account balance when, in fact, such error does exist is an example of detection risk.

The Risk That an Auditor Will Conclude, Based on Substantive