The risk that the auditor concludthat a material misstatement exists when it donot 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 will likely perform additional audit procedures or request additional evidence, which will increase audit effort and time. This is a precautionary measure to ensure that the financial statements are free from any misstatement. However, if the auditor later discovers that their initial conclusion was incorrect, it may lead to unnecessary additional work and cost for the auditor and the client.

The Risk That the Auditor Concludthat a Material Misstatement Exists