What are the definition and components of audit risk?

The so-called audit risk refers to the possibility that certified public accountants may express inappropriate audit opinions after auditing due to major errors or omissions in accounting statements.

Components:

The audit risk model was put forward in Statement No.47 of Auditing Standards issued by American Institute of Certified Public Accountants:

Audit risk = inherent risk × control risk × inspection risk

Therefore, audit risk consists of inherent risk, control risk and inspection risk:

1, inherent risk:

It refers to the possibility that a certain determination in the accounting statements will produce material misstatement without considering the relevant internal control policies or procedures of the audited entity. It exists independently of the audit of accounting statements, which is the risk that certified public accountants cannot change their actual level.

2. Control risks:

Refers to the possibility that the internal control of the audited entity fails to prevent or discover the misstatement or omission in its accounting statements in time. Like inherent risks, auditors can only evaluate their level, and cannot affect or reduce their size.

3, check the risk:

It refers to the possibility that certified public accountants fail to find out that there are major misstatements or omissions in the accounting statements of the audited units through the scheduled audit procedures. Checking risk is the only risk element that CPA can control and manage.