Question

while performing an audit of accounts recieveable allen cpa found that the sample results supported the conclusion that the accounts recievable balance was materially mistated. however, the balanc was, in fact not materially misstated this situation illustrates the risk of

Answer 1

The risk illustrated in this situation is incorrect audit conclusions or errors in the audit process.

Step-by-step explanation:

This situation illustrates the risk of incorrect audit conclusions or errors in the audit process.

Even though the sample results supported the conclusion that the accounts receivable balance was materially misstated, the actual balance was not materially misstated. This highlights the possibility of errors and misjudgments in the auditing process, including sampling biases or incorrect interpretations of evidence.

Auditors need to be cautious and thorough in their examination to minimize the risk of reaching incorrect conclusions that could potentially impact financial statements and decision-making.