Audit risk

This refers to the risk that an auditor may incorrectly give a positive report because they have not identified significant errors or fraud.

The level of risk varies according to the levels of inherent risk (for example cash transactions are more susceptible to fraud), control risks (for example poor controls can increase the likelihood of errors being made) and detection risk (for example a poorly trained audit team may not have the skills to understand the transactions they are reviewing).

Audit risk is a term normally found in audit, risk and control. Explore our learning zone to discover more