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CMA Intermediate · Corporate Accounting and Auditing · Nature, Scope, Objectives and Significance of Auditing

Under SA 200, which statement about the auditor's objectives in conducting an audit of financial statements is correct?

Under SA 200 the auditor must obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether from fraud or error, and report in accordance with the findings. Absolute assurance, checking every balance regardless of materiality, or judging management efficiency is not required.

  1. AObtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, and report in accordance with the auditor's findingsCorrect
  2. BObtain absolute assurance that every transaction is correctly recorded
  3. CVerify the accuracy of each account balance irrespective of materiality
  4. DAssess whether the management's business decisions were the most efficient ones

Explanation

SA 200 sets two objectives: obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error, and report on them as the findings dictate. Absolute assurance and verifying every balance regardless of materiality are not required, and judging efficiency of management decisions is not an audit objective.

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