CMA Intermediate · Corporate Accounting and Auditing · Nature, Scope, Objectives and Significance of Auditing
Which of the following is an inherent limitation of an audit?
Reliance on sampling and professional judgement is an inherent limitation, because audit evidence is persuasive rather than conclusive. Independence, planning and documentation are required features of a sound audit and do not limit it.
- AThe auditor is independent of the management
- BThe auditor uses sampling and professional judgement, so evidence is persuasive rather than conclusiveCorrect
- CThe auditor plans the audit before starting fieldwork
- DThe auditor documents the work performed in working papers
Explanation
Audit evidence is generally persuasive rather than conclusive because of sampling, judgement, and limits of internal control. Independence, planning and documentation are good audit practices, not limitations.
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More Nature, Scope, Objectives and Significance of Auditing questions
- Which of the following is a primary objective of auditing, as distinct from an incidental objective?
- Which of the following is an inherent limitation of an audit that persists even when the auditor plans and performs the work carefully?
- Under SA 200, which statement about the auditor's objectives in conducting an audit of financial statements is correct?
- Which statement best describes a limitation arising from the nature of audit evidence?
- Which of the following is a distinction between accounting and auditing?
- Which of the following is correct about the auditor's responsibility for detecting errors and fraud in a financial statement audit?