Which of the following characteristics accurately describes an audit? A) Fraudulent activities are always discovered by...
Which of the following characteristics accurately describes an audit?
A) Fraudulent activities are always discovered by auditors
B) Provides absolute assurance to the users of the financial statements.
C) All transactions of an organization are reviewed.
D) Obtains sufficient appropriate evidence to reduce risk to an acceptably low level.
Confused between C and D here.
Homework Answers
| Answer : Option D [ Obtains sufficient appropriate evidence to reduce risk to an acceptably low level. ] |
| Explanation : In audit it is not possible to give absolute assurance due to the inherent limitations of audit and hence only sufficient evidence is obtained. |
| In audit all transaction are not reviewed, but the transactions are reviewed on sample basis. |
| Due to the nature and limitations of audit, all Fraudulent activities are not discovered by it |
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