Engagement risk is:
A)the risk of issuing an incorrect audit opinion.
B)the auditor's risk of loss from events arising in connection with financial statements audited and reported upon.
C)the overall risk of material misstatement.
D)the risk of the entity's financial failure.

Question

Quizplus · Accepted Answer

Engagement risk refers to the auditor's risk of loss or damage to professional reputation from being associated with a client's financial statements, particularly if those statements are found to be materially misstated or if the client engages in fraudulent activities. It encompasses the broader implications and potential fallout for the auditor beyond the specific task of auditing financial statements.

Engagement Risk Is