An internal auditor is performing testing to gather evidence regarding an organization’s inventory account balance...

Incorrect acceptance risk refers to the risk that an auditor concludes that a financial statement assertion is not materially misstated when, in reality, it is. This type of risk is particularly relevant when performing substantive testing on balances such as inventory, where the auditor uses sampling to draw conclusions about the entire account balance.

Auditing standards regarding audit sampling and risk assessment, including the concepts of Type I and Type II errors in auditing.