Audit risk is commonly understood as the risk that the auditor will:
Correct answer: C. Express an inappropriate opinion
- A. Prepare incorrect accounting records
- B. Fail to record every transaction
- C. Express an inappropriate opinion
- D. Overstate the entity's profits
Explanation
Audit risk is the possibility that an inappropriate audit opinion is issued on financial statements containing a material misstatement. Preparing records and recording transactions are primarily management responsibilities.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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