detection risk

Definition

A type of risk inherent in the analysis of a company's financial statements that states that an auditor will find no errors when in reality there are errors on these statements.

Use detection risk in a sentence

You should always try and make sure you know what the detection risk might be and do your best to adapt to it.l

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The detection risk was very real and we had to do something to make sure it did not have a negative impact on us.

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When he fudged the books at his rafting adventure company, Harry knew that his detection risk was quite high and he was concerned what would happen to his business if here were found out.

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