The risk of material misstatement differs from detection risk in that it:
A)arises from the misapplication of auditing procedures.
B)may be assessed in either quantitative or qualitative terms.
C)exists independently of the actions of the auditor.
D)can be changed at the auditor's discretion.

Question

Quizplus · Accepted Answer

Material misstatement is a risk that exists in the financial statements themselves, independent of the auditor's actions. It is the risk that the financial statements contain material misstatements due to error or fraud. Detection risk, on the other hand, is the risk that the auditor fails to detect a material misstatement even though the audit procedures performed are appropriate and effective. Detection risk can be changed at the auditor's discretion.

The Risk of Material Misstatement Differs from Detection Risk in That