When Discussing Acceptable Audit Risk (AAR) and the Audit Risk

question 82

Multiple Choice

When discussing acceptable audit risk (AAR) and the audit risk model, which one of the following statements is true?

• A) AAR is objectively determined by the auditor.
• B) The terms audit assurance, overall assurance or level of assurance are synonyms for AAR.
• C) When the auditor decides on a lower acceptable audit risk, it means the auditor wants to be more certain that the financial statements are not materially misstated.
• D) AAR is the risk that the auditor is willing to take that the financial statements are fairly stated after the audit is completed and an unqualified opinion has been reached.

---

Definitions:

Casualty Insurance

Insurance that protects a party from accidental injury.

Accidental Injury

Physical harm or damage to a person resulting from an unexpected event or incident.

Case Opener

A tool or device designed to open protective casings, commonly associated with packaging or equipment maintenance.

Privilege

A special right, advantage, or immunity granted to a particular person or group.