ACCA AA · Chapter 6 · Question 1 of 11
How does ISA 200 define audit risk?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated
Explanation
Audit risk is a function of the risks of material misstatement (inherent and control risk) and detection risk. Business risk relates to the entity's objectives, litigation risk is a separate engagement risk, and control deficiencies are one possible source of control risk.
More Audit risk, materiality and analytical procedures MCQs
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- Q6Why does ISA 320 require the auditor to set performance materiality at an amount lower than overall materiality?
- Q7Overall materiality for the audit of Mullion Co has been set at $420,000. The audit manager sets performance materiality at 70% of overall…