What is Audit Risk? Audit Procedure for an Account Balance Audit Procedure for Cash & Bank Balance

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Audit risk is the risk that an auditor expresses an inappropriate opinion on financial statements.

Audit risk is the risk that the auditor may issue an incorrect opinion on the financial statements.
It is the risk that the auditor may fail to detect material misstatements in the financial statements.
Audit risk is composed of inherent risk, control risk, and detection risk.
Inherent risk is the risk of material misstatement in the absence of internal controls.
Control risk is the risk that a material misstatement will not be prevented or detected by internal controls.
Detection risk is the risk that the auditor will not detect a material misstatement that exists in the financial statements.
Audit risk can be reduced by performing more extensive audit procedures or by obtaining more reliable evidence.
Examples of audit procedures for an account balance include testing the completeness and accuracy of the balance, verifying the existence of the balance, and testing the valuation of the balance.
Examples of audit procedures for cash and bank balances include confirming the balances with the bank, testing the completeness and accuracy of the balances, and testing the cutoff of transactions.

What is Audit Risk? Audit Procedure for an Account Balance Audit Procedure for Cash &amp; Bank Balance