The existence of audit risk is recognized by the statement in the auditor's standard report that the auditor ________.
A)obtains reasonable assurance about whether the financial statements are free of material misstatement
B)assesses the accounting principles used and also evaluates the overall financial statement presentation
C)realizes some matters,either individually or in the aggregate,are important while other matters are not important
D)is responsible for expressing an opinion on the financial statements,which are the responsibility of management

Question

Quizplus · Accepted Answer

The statement that "the auditor obtains reasonable assurance about whether the financial statements are free of material misstatement" acknowledges the existence of audit risk. Audit risk arises because it is not possible for the auditor to provide absolute assurance that the financial statements are completely free from material misstatement, due to factors such as the limitations of audit procedures, the possibility of fraud or error, and the subjectivity involved in the exercise of professional judgment. The auditor can only provide reasonable assurance, which is a high but not absolute level of assurance, that the financial statements are free from material misstatement.

The Existence of Audit Risk Is Recognized by the Statement