Which of the following best describes the concept of risk assessment on which auditors can provide independent assurance?
A)The risk that financial statements are misstated because of fraud.
B)The risk that financial statements are misstated because of error or fraud.
C)Whether management has systems in place to evaluate and effectively manage the entity's business risks.
D)Developing client acceptance and continuance practices that minimize the likelihood of lawsuits against the auditor.

Question

Quizplus · Accepted Answer

Risk assessment refers to the process of identifying, analyzing, and evaluating the risks that could affect an organization's ability to achieve its objectives. Auditors can provide independent assurance on whether management has systems in place to evaluate and effectively manage the entity's business risks.

Answer: B 
 Risk assessment relates to the risk that financial statements are misstated because of error or fraud. Auditors can provide independent assurance on whether the financial statements are free from material misstatement due to error or fraud.

Therefore, both option C and option B are correct choices as they both describe the concept of risk assessment on which auditors can provide independent assurance.

Which of the Following Best Describes the Concept of Risk