The risk of concluding a material error does not exist when in fact it does, is also known as:
A) risk of overreliance.
B) risk of underreliance.
C) risk of incorrect acceptance.
D) risk of incorrect rejection.

Question

Quizplus · Accepted Answer

The risk of incorrect acceptance is the risk that auditors may conclude that a material error does not exist when, in fact, it does. This can lead to auditors accepting the financial statements as being fair when there might be significant errors present.

The Risk of Concluding a Material Error Does Not Exist