What are the audit risks? How does it affect the auditor? For what reason does the auditor begin to identify the risks related to the audit at which stage of the audit?

Audit risks are the risk that the auditor expresses an inappropriate opinion on the financial statements of an entity. There are three components of an audit risk i.e. Inherent risk, Control Risk and Detection Risk.

Inherent risk is the risk arising based on the assumption that there no related controls. It is addressed at both the assertion level and the financial statements level.

Control risk is the risk that the entity's internal control will not be able to prevent, detect or correct the misstatement either individually or in aggregate with the other misstatement that could be material.

Detection riskis the risk that the auditor will not be able to detect any material misstatement in the financial statements of an entity.

It affects the auditor because of the fact that the auditor expresses an inappropriate opinion due to the presence of these audit risks.

Auditor is required to assess the audit risk from the stage of planning to each and every stage of audit till the audit gets completed. Auditor is required to assess the risk of material misstatement at financialstatementslevel and at each assertion level of accounts balance, class of transaction and disclosure.