Exam CISA topic 1 question 955 discussion

In this scenario, the audit manager discovers that evidence was overlooked during the audit, which indicates that a procedural control may have failed and could contradict a conclusion of the audit. This oversight affects the risk associated with the audit itself. The audit risk is the risk that the auditor issues an incorrect opinion on the financial statements or fails to detect material misstatements. Audit risk is composed of three components: inherent risk, control risk, and detection risk. Inherent risk is the susceptibility of a financial statement assertion to a material misstatement, regardless of the client's internal controls. Control risk is the risk that a material misstatement could occur and not be prevented or detected by the client's internal controls. Detection risk is the risk that the auditor's procedures will not detect a material misstatement that exists.