CA Intermediate · Auditing and Ethics · Nature, Objective and Scope of Audit

CA Meera is the statutory auditor of Gomti Engineering Ltd., a company whose financial statements are prepared under the applicable framework. Management proposes that Meera sign off on the books with an engagement to prepare the company's financial statements and to draw up its internal accounting policies, in addition to the audit. Meera also wants to ensure the audit is correctly distinguished from other engagements. Which statement is correct?

The correct statement is that the auditor expresses an opinion on whether the financial statements are prepared, in all material respects, under the applicable framework, while preparation remains the responsibility of management and the Board. The audit neither shares nor removes management's responsibility.

1. AIn an audit, the auditor expresses an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework, while responsibility for preparing them remains with managementCorrect
2. BThe auditor is primarily responsible for preparing the financial statements and management merely approves them
3. CResponsibility for the financial statements is shared equally between auditor and management
4. DThe audit opinion removes management's responsibility for the preparation of the financial statements