ACCA Strategic Professional · Advanced Audit and Assurance (International) · International regulatory frameworks for audit and assurance services
Brandt & Co is explaining to a new client, Lumen Retail, the overall objectives of the independent auditor under ISA 200 when conducting an audit in accordance with ISAs. Which of the following correctly states one of those overall objectives?
One overall objective under ISA 200 is to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether from fraud or error, enabling the auditor to express an opinion on them under the applicable framework. Absolute assurance is not possible.
- ATo obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and so express an opinion on whether they are prepared in accordance with the applicable frameworkCorrect
- BTo obtain absolute assurance that the financial statements contain no misstatement of any size
- CTo detect and correct all fraud within the entity and report it to the regulator
- DTo prepare the financial statements on behalf of management and confirm their accuracy
Explanation
ISA 200 sets the overall objectives as obtaining reasonable assurance that the financial statements as a whole are free from material misstatement, due to fraud or error, and reporting in accordance with ISA findings. Absolute assurance is not attainable because of inherent limitations. Preparation of the statements is management's responsibility, not the auditor's.
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