

Audit risk is the possibility that an auditor may issue an incorrect opinion on a company’s financial statements, typically by concluding that the statements are accurate when they contain material misstatements.
Audit risk is a critical concept for Indian businesses subject to statutory audits under the Companies Act, 2013, Income Tax Act, or GST regulations.
It influences audit planning, internal controls, and the accuracy of financial reporting.
A high audit risk can lead to regulatory penalties, restatements, reputational damage, or compliance gaps.