Audit risk is the risk where an inappropriate audit opinion expressed by the auditor whereby material misstatement involve in the financial statement

Audit risk is the risk where an inappropriate audit opinion expressed by the auditor whereby material misstatement involve in the financial statement. There are 3 components of audit risk which is the inherent risk where omission or error in financial statement arise the risk of a material misstatement. Control risk arise when the control of the entity was absence or defeat during its operation. Detection risk was the failure in detecting material misstatement by auditor. Therefore, auditor should evaluate the level of risk by examining the 3 components risk
To further determine the significance of error or omission of transaction and balances contain in financial statement, materiality will then be applied by auditor in the aspects of quantitative and qualitative. According to ISA 320, it highlighted materiality could be use as the judgment based on the size or nature of misstatement that could be material to influence decision of the financial statement’s user. In the case of ACCYS, materiality was set based on 1% of its revenue (609,000) as a preliminary judgement where any amount above the judgement will be chosen as an audit risk area and follow with quantitative consideration to do further explanation