Audit risk in the audit risk model concerns the risk that the auditor may issue an unqualified opinion on financial statements that are materially misstated.What is the manner in which the auditor assesses audit risk in using the audit risk model to determine the nature,extent and timing of audit evidence to collect in an audit.

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In the audit risk model, the auditor assesses audit risk to maintain a low level of audit risk given engagement risk. Engagement risk is the risk that the auditor may suffer harm to its reputation as a result of an association with a particular client. It is used to determine the acceptable level of audit risk that the auditor is willing to take on a specific engagement. The auditor then uses the acceptable level of audit risk to determine the nature, extent, and timing of audit evidence needed to collect during the audit.

Audit Risk in the Audit Risk Model Concerns the Risk