Audit Risk

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Dictionary Says

Definition of 'Audit Risk'

The risk that an auditor will not discover errors or intentional miscalculations (i.e. fraud) while reviewing a company's or individual’s financial statements. There are two general categories of audit risk – risk regarding assessment of the financial materials and risk regarding the assertions produced by evaluation of the financial materials. 

Companies request an audit in order to provide confidence to investors that their financial statements and reporting are accurate. In order to insure against potential litigation arising from missed financial improprieties, such as material misstatements, auditors will typically carry malpractice insurance.
Investopedia Says

Investopedia explains 'Audit Risk'

Large public companies typically engage one of the Big Four accounting firms – PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte Touche Tohmatsu – for their internal audits. The Big Four was previously the Big Five, but Arthur Andersen fell out of the group after being indicted on counts of obstruction of justice for its role in the Enron scandal. 

According to a 2008 Government Accountability Office report, the Big Four firms audit 98% of U.S. companies with annual revenues over $1 billion. Smaller companies are more likely to engage one of the “mid-range” firms, such as Grant Thornton or BDO Seidman.
Search results for

'Audit Risk'

  • CFA Level 1 Study Guide - Financial Statements - The Auditor and ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/auditor-audit-opinion.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • RINO Exposes China's Risk

    http://stocks.investopedia.com/stock-analysis/2010/RINO-Exposes-Chinas-Risk-FEED-RINO-ONP-CGA1119.aspx
    ... should not preclude any investment in the region, it demands an extra appreciation
    for risk. ... conference call as a result of a meeting with its audit committee. ...

  • Avoid An Audit: 6 "Red Flags" You Should Know

    http://www.investopedia.com/articles/pf/07/avoid_audits.asp
    ... Other Sensitive Tax Areas Partnership/Trust/Tax Shelter Risk If you own shares in
    a ... While there may be no way to avoid such an audit, individuals that have a ...

  • CFA Level 1 Study Guide - Financial Ratios - Financial Risk Ratios ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-ratios/financial-risk-ratios.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Measuring ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/measuring-interest-rate-risk.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Liquidity ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/liquidity-risk.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Inflation ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/inflation-risk.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • CFA Level 1 Study Guide - Corporate Finance - Types of Risk ...

    http://www.investopedia.com/exam-guide/cfa-level-1/corporate-finance/types-of-risk.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Exchange-Rate ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/exchange-rate-risk.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Volatility ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/volatility-risk.asp
    ... 6.25 The Auditor and Audit Opinion; 6.26 Financial Reporting Objectives and ... Return
    on Investment Ratios; 7.5 Operating Efficiency Ratios; 7.6 Business Risk Ratios ...

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