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CMA Intermediate · Corporate Accounting and Auditing · Brief Introduction to Auditing Standards

As per SA 200, the auditor's opinion on the financial statements deals with whether they are prepared, in all material respects, in accordance with the applicable financial reporting framework. Which of the following does the opinion therefore NOT assure?

The auditor's opinion does not assure the future viability of the entity. It only addresses whether the financial statements are prepared, in all material respects, in accordance with the applicable framework, and does not cover management's efficiency or effectiveness either.

  1. ACompliance with the applicable financial reporting framework in all material respects
  2. BThe future viability of the entityCorrect
  3. CThat the financial statements are prepared on the basis of the framework chosen
  4. DThat the statements follow the standards of the recognised standards-setting body

Explanation

SA 200 says the opinion does not assure the future viability of the entity nor the efficiency or effectiveness of management's conduct of affairs. The other options describe what the opinion does cover, namely framework compliance.

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