Auditor A accepts a client in an industry where change is constant and rapid. Such a client presents which type of risk:
A) engagement risk.
B) inherent risk.
C) control risk.
D) detection risk.

Question

Quizplus · Accepted Answer

The rapid and constant change in the client's industry points towards inherent risk - the risk that exists in the client's environment, irrespective of the quality of internal controls or audit procedures. Auditors will need to consider this risk while planning and executing the audit. Engagement risk is the risk that the auditor is exposed to by accepting a particular client, control risk is the risk that a misstatement will not be prevented or detected by the client's internal controls, and detection risk is the risk that the auditor's substantive procedures will not detect a misstatement.

Auditor a Accepts a Client in an Industry Where Change