Question

Which of the following is correct?

		The detection of fraud and embezzlement is the primary purpose of audits
		Because auditors assess the internal controls of the organization, audited financial statements signify that fraud within the organization is not a concern
		Auditors are not needed if it can be guaranteed that the accountants are ethically upright
		Although internal controls are assessed as part of the audit process, not all frauds are likely to be caught by the auditor
		Audits are not intended to determine if the financial statements provide a fair representation of the financial status of the organization

Answer 1

The primary purspose of audit is to provide opinion on financial statements whether they reflect fair position as on the date of balance sheet or not. The auditors responsibility is to opine on financial statements and during the process, if he learns of any fraud, substantive audit procedures would be conducted. It is imperative to say that despite internal control being assessed, frauds are complicated nature and may bypass the controls. Audits also come as statutory requirement for most of the organizations.

Hence, the correct statement is Although internal controls are assessed as part of the audit process, not all frauds are likely to be caught by the audito