CA Intermediate · Auditing and Ethics · Nature, Objective and Scope of Audit
Tara & Associates are appointed auditors of Ganga Hotels Ltd. The audit committee asks which of the following best describes the objective of the audit of financial statements under SA 200.
The objective of an audit is to enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. This enhances users' confidence. It does not involve certifying management efficiency, preparing accounts or guaranteeing viability.
- ATo certify that the company's management has been efficient and that no fraud exists
- BTo enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting frameworkCorrect
- CTo prepare the financial statements and notes on behalf of management so they are free of error
- DTo guarantee the future viability of the company to its shareholders
Explanation
SA 200 states that the purpose of an audit is to enhance the degree of confidence of intended users in the financial statements. This is achieved by the auditor expressing an opinion on whether they are prepared, in all material respects, in accordance with an applicable financial reporting framework. Certifying efficiency, preparing statements or guaranteeing viability are not audit objectives.
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