Question

A financial statement audit is designed to

Provide assurance on internal control and to identify significant deficiencies and material weaknesses.

Obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error.

Detect error or fraud in the financial statements, regardless of whether or not the error or fraud is material.

Obtain absolute assurance on the financial statements and express an opinion on the financial statements.

Answer 1

Correct option is (b)

Financial statements after they are prepared are verified and approved by an auditor before they are released to the key stakeholders including public at large. The auditor verifies if the statements confirm to accounting standards or framework like GAAP (Generally Accepted Accounting Principles). The auditor also needs to check if there are no errors in preparing the statement and that all material facts are revealed. Any kind of fraud should also be reported. This is done to assure that the stakeholders have access to error free and genuine financial statements that depicts true position of the organization.