Audit risk is
A)the risk that material misstatements occur in the financial statements and are detected by the auditor
B)the risk that misstatements occur in the financial statements and are not detected by the auditor
C)the risk that material misstatements occur in the financial statements
D)the risk that material misstatements occur in the financial statements and are not detected by the auditor

Question

Quizplus · Accepted Answer

Audit risk is the risk that the auditor may unknowingly fail to modify their opinion on the financial statements that are materially misstated. Hence, the best choice is D, as it considers both the possibility of material misstatements in the financial statements and the risk that the auditor may fail to detect them.

Audit Risk Is