The risk the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance under audit is greater than the tolerable misstatement is
A) the upper bound.
B) the tolerable risk.
C) the acceptable risk of incorrect acceptance.
D) the lower bound.

Question

Quizplus · Accepted Answer

The acceptable risk of incorrect acceptance is the risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance under audit is greater than the tolerable misstatement. This risk is determined by the auditor based on professional judgment, and it represents the maximum level of risk the auditor is willing to take when performing an audit. If the actual misstatement in the balance exceeds the tolerable misstatement, the auditor will not be able to detect the misstatement with reasonable assurance, and this may result in an incorrect audit opinion. Therefore, the acceptable risk of incorrect acceptance is a critical factor in determining the appropriate level of audit evidence required to reduce the risk of incorrect acceptance to an acceptable level.

The Risk the Auditor Is Willing to Take of Accepting