Identify and Explain the Three Broad Types of Risk of Paramount

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The Answer is Although auditors deal with many forms of risk during the course of an engagement, three broad types of risk are of paramount interest to the auditor: client business risk, engagement risk, and audit risk.
i) Client business risk reflects the possibility that an organization will experience adverse outcomes as a result of economic conditions, events, circumstances, or management action/inaction.
ii) Engagement risk refers to the risk the audit firm is exposed to due to loss or injury from litigation, adverse publicity, or other events arising in connection with the audited financial statements
iii) Audit risk is defined as the likelihood that an auditor will render an incorrect opinion on the financial statements in spite of the effort expended to conduct the audit effectively.

Identify and Explain the Three Broad Types of Risk of Paramount

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