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

Which statement best describes the primary objective of an independent financial statement audit?

The primary objective of an audit is to let the auditor express an opinion on whether the financial statements are prepared, in all material respects, under the applicable reporting framework. It gives reasonable assurance, not a guarantee of fraud detection, viability or preparation of accounts.

  1. ATo detect every fraud and error in the books of account
  2. BTo enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting frameworkCorrect
  3. CTo guarantee the future viability of the entity
  4. DTo prepare the financial statements on behalf of management

Explanation

The main objective of an audit is to enhance the confidence of intended users by enabling the auditor to express an opinion on whether the statements are prepared in all material respects under the applicable framework. Detecting every fraud is not the objective, since an audit gives reasonable, not absolute, assurance. Preparation of statements is management's responsibility.

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