The risk that the auditor concludes that a material misstatement exists when it does not is likely to result in an increase in audit effort when it is not required.

Question

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If the auditor concludes that a material misstatement exists when it does not, they may need to spend additional time and resources investigating and verifying the accuracy of the financial statements. This could result in an increase in audit effort that is not necessary, and could lead to increased costs for the client.

The Risk That the Auditor Concludes That a Material Misstatement