Risk is cumulative.If business risk is extremely high,the auditor will likely make a decision to not be associated with a client because engagement risk will be too high.

Question

Quizplus · Accepted Answer

This statement is true. The auditor considers multiple factors when assessing engagement risk, and a high level of business risk can contribute to an unacceptable level of overall risk for the auditor. Risk is cumulative, meaning that multiple sources of risk can compound and increase the likelihood of negative outcomes, such as errors or fraud going undetected. Therefore, if the auditor determines that the business risk is too high, they may decline the engagement to avoid unacceptable levels of risk.

Risk Is Cumulative