The risk to investors that a company's financial statements may be materially misleading is called

Question

Quizplus · Accepted Answer

Information risk refers to the risk that the financial statements provided by a company contain materially misleading information that could lead investors to make wrong decisions. Client acceptance risk refers to the risk that a new client may not be creditworthy or may pose a risk to the auditor's independence. Moral hazard refers to the risk that a party may be more willing to take risks when they are insulated from the consequences of those risks. Finally, business risk refers to the risk that a company may face due to various internal and external factors that may impact its ability to generate profits.

The Risk to Investors That a Company's Financial Statements May