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CMA Intermediate · Corporate Accounting and Auditing · Nature, Scope, Objectives and Significance of Auditing

An audit that evaluates whether an entity's operations were conducted with economy, efficiency and effectiveness, rather than only verifying the truth and fairness of financial statements, is known as:

This is an efficiency or performance audit. It judges whether resources were used with economy, efficiency and effectiveness in meeting objectives. A statutory audit instead focuses on whether financial statements give a true and fair view, while interim and balance sheet audits relate to timing or scope of verification.

  1. AEfficiency (performance) auditCorrect
  2. BInterim audit
  3. CStatutory audit
  4. DBalance sheet audit

Explanation

An efficiency or performance audit assesses whether resources were used economically, efficiently and effectively in achieving objectives. A statutory audit centres on true and fair view of the financial statements. Interim audit is about timing, covering a part of the year, and a balance sheet audit verifies assets and liabilities.

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