Detection risk is the risk that auditors do not discover errors in financial statements.

Detection risk is the risk that auditors do not discover errors in financial statements.

• A. It is the risk that auditors do not discover errors in financial statements.
• B. It is the risk that management overrides controls.
• C. It is the risk that errors are discovered by accident.
• D. It is the risk that the audit is completed quickly.

Answer: (A)

Detection risk is the risk that the audit procedures fail to detect a material misstatement in the financial statements. It sits within the broader audit risk model, alongside inherent risk and control risk, and arises from the limitations of the procedures, sampling, and judgment used in gathering evidence. The statement aligns with this definition because it directly describes the possibility that auditors do not discover errors despite performing the audit. The other options miss this idea: management overrides controls relates to control risk and fraud risk, not the effectiveness of audit procedures; errors discovered by accident is not the defined focus of detection risk; completing the audit quickly is an efficiency issue that can influence detection risk only indirectly, not what the term itself means.

Detection risk is the risk that the audit procedures fail to detect a material misstatement in the financial statements. It sits within the broader audit risk model, alongside inherent risk and control risk, and arises from the limitations of the procedures, sampling, and judgment used in gathering evidence. The statement aligns with this definition because it directly describes the possibility that auditors do not discover errors despite performing the audit.

The other options miss this idea: management overrides controls relates to control risk and fraud risk, not the effectiveness of audit procedures; errors discovered by accident is not the defined focus of detection risk; completing the audit quickly is an efficiency issue that can influence detection risk only indirectly, not what the term itself means.