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CS Professional · Compliance Management, Audit and Due Diligence · Concepts of Various Audits

Sunrise Textiles Ltd, Surat, engages a firm of chartered accountants to examine its financial statements and report whether they give a true and fair view in accordance with the applicable financial reporting framework. Which kind of audit is this?

This is a statutory financial audit, because the auditor examines financial statements and expresses an opinion on whether they give a true and fair view under the applicable framework. Management, cost and propriety audits have different objectives.

  1. AStatutory financial auditCorrect
  2. BManagement audit
  3. CCost audit
  4. DPropriety audit

Explanation

An examination of financial statements to express an opinion on true and fair view under the applicable framework is a financial (statutory) audit. Management audit evaluates managerial performance, cost audit verifies cost records, and propriety audit tests whether transactions are wise and in public interest.

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