The auditor’s concern best describes which of the following risks?

An internal auditor is performing testing to gather evidence regarding an organization’s inventory account balance and is mindful of the possibility that the sample used might support the conclusion that the recorded account balance is not materially misstated when, in fact, it is.

The auditor’s concern best describes which of the following risks?
A . incorrect rejection risk
B . Incorrect acceptance risk.
C . Tolerable misstatement risk.
D . Anticipated misstatement risk

View Answer

Answer: B

Explanation:

Incorrect acceptance risk refers to the risk that an auditor concludes that a financial statement assertion is not materially misstated when, in reality, it is. This type of risk is particularly relevant when performing substantive testing on balances such as inventory, where the auditor uses sampling to draw conclusions about the entire account balance.

Reference: Auditing standards regarding audit sampling and risk assessment, including the concepts of Type I and Type II errors in auditing.