Answered: It refers to the risks that a material…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 7RQSC: Professional guidance indicates that the auditor should consider revenue recognition to be high risk...

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It refers to the risks that a material misstatement will even occur, that it would not be prevented or
detected by client internal controls, and that is not detected by the auditor’s own procedures.
a. Inherent risk
b. Control risk
c. Detection risk
d. Audit risk

Audit risk and materiality are considered at the level of
a. Overall financial statements.
b. Assertions relating to individual account balance, class of transactions, or disclosure.
c. Both a and b.
d. Neither a nor b.

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