The risk of associating with a client known to have a dubious reputation for honesty is referred to as:
A) audit risk.
B) detection risk.
C) engagement risk.
D) Both b and c

Question

Quizplus · Accepted Answer

The risk of associating with a client known to have a dubious reputation for honesty is referred to as engagement risk. This refers to the risk that the auditor may be associated with the client's dishonesty, which could lead to damage to the auditor's reputation, legal liability, or financial loss. Detection risk refers to the risk that the auditor may fail to detect a material misstatement in the financial statements, while audit risk is the combination of inherent risk, control risk, and detection risk.

The Risk of Associating with a Client Known to Have