7) Types of Audit opinion, audit risk.

Question

Accepted Answer

Types of audit opinion include unqualified, qualified, adverse, and disclaimer. Audit risk is the risk of material misstatement.

Unqualified opinion means the financial statements are fairly presented.
Qualified opinion means there are some limitations or exceptions in the financial statements.
Adverse opinion means the financial statements are materially misstated.
Disclaimer opinion means the auditor is unable to express an opinion.
Audit risk is the risk that the auditor may issue an incorrect opinion.
Audit risk is affected by inherent risk, control risk, and detection risk.
Inherent risk is the risk of material misstatement before considering internal controls.
Control risk is the risk that internal controls will not prevent or detect material misstatements.
Detection risk is the risk that the auditor will not detect material misstatements.
The auditor's goal is to reduce audit risk to an acceptably low level.

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