What is information risk in an audit context?
I see this phrase in the AICPA materials but I am not sure how to explain it on a multiple-choice question.
Information risk is the risk that users rely on financial information that is materially wrong or incomplete. Audits reduce that risk by requiring an independent auditor to assess risks, gather sufficient appropriate evidence, evaluate misstatements, and communicate an opinion. The audit does not remove business risk, but it can reduce uncertainty about the reported numbers.
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