The fundamental objective of the audit of a company is to A. Protect the interests of the minority shareholders B. Detect and prevent errors and fraud C. Assess the effectiveness of the company’s performance D. Attest to the credibility of the company’s accounts
Question
The fundamental objective of the audit of a company is to A. Protect the interests of the minority shareholders B. Detect and prevent errors and fraud C. Assess the effectiveness of the company’s performance D. Attest to the credibility of the company’s accounts
Solution
The fundamental objective of the audit of a company is D. Attest to the credibility of the company’s accounts.
Here's why:
An audit is an independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to express an opinion thereon. This opinion helps stakeholders make informed decisions.
While A, B, and C may be secondary objectives or outcomes of an audit, the primary purpose is to attest to the credibility of the company's accounts, ensuring that they are accurate, complete, and in accordance with laws and regulations. This provides assurance to all stakeholders - including shareholders, creditors, and regulators - that they can rely on the financial statements.
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