Which of the following statements regarding audit risk (AudR)and accounting risk (AccR)is FALSE?
A)AccR is largely geared to reflect business risks of the auditee.
B)AccR is the material difference between an estimate involving future events and its outcome.
C)AudR is something that is relevant to the auditee but not to the auditor.
D)The auditor has to consider both AudR and AccR and somehow combine them using professional judgment.

Question

Quizplus · Accepted Answer

AudR is relevant to both the auditee and the auditor. The auditor has to consider AudR to assess the risk that a material misstatement might exist in the financial statements, while the auditee needs to understand AudR to evaluate the level of assurance provided by the auditor. AccR, on the other hand, is largely geared towards reflecting the inherent risks associated with the financial information and has nothing to do with the business risks of the auditee. Choices A, B, and D are true statements regarding AudR and AccR.

Which of the Following Statements Regarding Audit Risk (AudR)and Accounting