A significant risk is an identified and assessed risk of material misstatement that, in the auditor's judgment, requires special audit consideration.Which of the following would be classified as a significant risk?
A)A risk related to a significant economic or accounting development.
B)A risk related to transactions for a simple operating lease, like you sign when you rent an apartment.
C)A risk that does not involve a related party transaction.
D)A risk related to a transaction that involves a recording error, but was not intentional, like a fraud.

Question

Quizplus · Accepted Answer

A risk related to a significant economic or accounting development is considered a significant risk as it could potentially have a material impact on the financial statements. The other options, such as transactions for a simple operating lease, a risk not involving a related party transaction, and a recording error that was not intentional, would not necessarily be considered significant risks in and of themselves.

A Significant Risk Is an Identified and Assessed Risk of Material