Dictionary of Accounting Terms: audit risk
audit risk
possibility that the auditor will not uncover irregularities in the financial records resulting from fraud, negligence, or other reasons. For example, the auditor's sampling techniques will not always uncover an improper item such as an overstated expense. Further, the evaluation of internal control and checks may not spot a deficiency. The auditor should try to protect against the adverse consequences of failing to uncover irregularities by obtaining representation letter and adequate malpractice insurance.
