Audit risk is defined as:
A) the risk that the client is committing fraud.
B) the risk associated with a specific client.
C) the risk that the auditor fails to detect a material misstatement.
D) All of the above.

Question

Quizplus · Accepted Answer

Audit risk is the risk that the auditor may fail to detect a material misstatement in the financial statements of a client. This can arise due to various factors such as limitations of audit procedures, errors or fraud in the client's records or financial statements, or lack of sufficient evidence. Therefore, option C is the correct choice. The other options are not correct as audit risk is not necessarily associated with a specific client or indicative of fraud committed by the client.

Audit Risk Is Defined As