CPA CFE Exam

What is audit risk, and what are its three components?

The risk of business failure; market risk, credit risk, and operational risk The risk that the auditor may unknowingly fail to modify the opinion on materially misstated financial statements; inherent risk, control risk, and detection risk The risk of losing the audit client; pricing risk, timing risk, and staffing risk The risk of regulatory sanctions; compliance risk, legal risk, and reputational risk

Correct Answer:

The risk that the auditor may unknowingly fail to modify the opinion on materially misstated financial statements; inherent risk, control risk, and detection risk

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