The likelihood that the financial statements will be materially misstatement as a result of misappropriation of assets is part of the auditor's assessment of ______.
A)Detection risk
B)Information risk
C)Acceptable audit risk
D)Fraud risk

Question

Quizplus · Accepted Answer

The likelihood of material misstatement resulting from misappropriation of assets is a component of fraud risk. Fraud risk is the risk that there is an intentional misstatement in the financial statements, including misappropriation of assets. Detection risk pertains to the risk that the auditor will not detect material misstatements, while information risk relates to the risk that the information used by the auditor is inaccurate. Acceptable audit risk refers to the level of risk that the auditor is willing to accept that the financial statements are materially misstated after the audit has been conducted.

The Likelihood That the Financial Statements Will Be Materially Misstatement