AUDITING THEORY

Part – 12

1. The purpose of an audit of financial statements is to

a. Obtain an absolute level of assurance that the financial statements as a whole are free
from material misstatement
b. Relieve management or those charged with governance of the responsibility for the
preparation and presentation of the financial statements in accordance with applicable
financial reporting framework
c. Enhance the degree of confidence of intended users in the financial statements
d. Assures the future viability of the entity by expressing an opinion on the entity’s
financial statements

2. Which of the following statements does not properly describe an element of the
theoretical framework of auditing?
a. Remoteness of users
b. An audit benefit the public
c. The data to be audited are verifiable
d. Auditor should maintain independence with respect to the audit client

3. The statement that the reviewer “is not aware of any material modification that should be
made to the financial statements in order for them to be conformity with GAAP’ is
known as
a. Positive Assurance
b. Reasonable Assurance
c. Negative Assurance
d. Negligent Performance