Accounting risk (AccR)is largely geared to reflect business risks of the auditee.

Question

Quizplus · Accepted Answer

Accounting risk is indeed closely tied to the business risks faced by the auditee. Accounting risk refers to the risk that the financial statements may contain material misstatements or errors, which could result in incorrect conclusions being drawn by stakeholders. The level of accounting risk is influenced by a range of factors, including the complexity of the transactions and activities being undertaken by the auditee and the quality of the internal control systems in place. As such, accounting risk is closely linked to the underlying risks faced by the business, and auditors must take these factors into account when assessing the level of risk associated with an audit engagement.

Accounting Risk (AccR)is Largely Geared to Reflect Business Risks of the Auditee