What is the primary difference between financial reporting risk and audit risk?

Question

Quizplus · Accepted Answer

Financial reporting risk relates to the risk of misstatements in financial statements due to errors or intentional manipulation, while audit risk refers to the risk that the auditor fails to detect such misstatements. The primary difference between them is that financial reporting risk arises from the responsibility of the company management to prepare accurate financial statements, while audit risk arises from the responsibility of the auditor to provide an opinion on the accuracy of the financial statements. Therefore, the responsibilities of the respective parties involved are the primary difference between financial reporting risk and audit risk.

What Is the Primary Difference Between Financial Reporting Risk and Audit