What is audit risk?
A)the risk that an auditor expresses an inappropriate audit opinion when the financial statements are materially misstated
B)the risk that an auditor expresses an objectionable audit opinion when the financial statements are materially misstated
C)the risk that an auditor expresses an adverse opinion when the financial statements are materially misstated
D)the risk that an auditor expresses an incompatible audit opinion when the financial statements are materially misstated

Question

Quizplus · Accepted Answer

Audit risk is the risk that the auditor will issue an inappropriate audit opinion when the financial statements contain a material misstatement. This inappropriate opinion could be either an unqualified opinion when the financial statements contain a material misstatement or a qualified, adverse, or disclaimer of opinion when the auditor fails to detect a material misstatement. Therefore, answer A is the most appropriate choice. Choice B is incorrect as an objectionable audit opinion is not a recognized audit opinion. Choice C is incorrect as an adverse opinion is a recognized audit opinion, but it is issued when the auditor detects a material misstatement that is both material and pervasive. Choice D is incorrect as an incompatible audit opinion is not a recognized audit opinion.

What Is Audit Risk