Audit risk

Audit risk is a term that is commonly applied in relation to the audit of the financial statements of an entity. (See financial audit). The primary objective of such an audit is to provide an opinion as to whether or not the financial statements present fairly the financial position and results of the entity. Audit risk is the risk of the auditor providing an inappropriate opinion on the financial statements. In other words, it is the risk of the auditor stating the financial statements present fairly the financial position of the entity, when in fact they do not. (Although significantly a lesser risk, audit risk also encompasses the risk of the auditor stating the financial statements do not present fairly the financial position of the entity, when in fact they do.)
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