Audit Risk

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Accounting glossary · Understand, connect, apply

Audit risk is the risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated.

Example

An auditor issues an unmodified opinion although a material revenue overstatement remains undetected.

Remember the difference

Audit risk depends on the risk of material misstatement and the risk that audit procedures will fail to detect it.

Browse the accounting glossary · PCAOB reference: AS 1101

Prepared with AI assistance. Examples are fictional and simplified for learning.

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Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.

Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.

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